Sample Business Contracts

Issuance Agreement - ARTISTdirect LLC, Marc Geiger, Donald Muller and L&G Associates

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                               ISSUANCE AGREEMENT

         This ISSUANCE AGREEMENT (this "Agreement") is made as of January 1,
1998 (the "Effective Date") by and among ARTISTdirect, LLC, a California limited
liability company (the "Company"), Marc Geiger, an individual ("Geiger"), Donald
Muller ("Muller") and L&G Associates, a California general partnership ("L&G").
Any capitalized term used but not defined herein shall have the meaning ascribed
to it in that certain Operating Agreement of the Company dated as of September
1, 1996 (the "Operating Agreement").

                                 R E C I T A L S

         WHEREAS, Geiger and Muller are the sole Members of the Company;

         WHEREAS, L&G is a provider of consulting services to the Company and
its affiliates, including, without limitation, Geiger and Muller;

         WHEREAS, to compensate L&G for the services rendered and to be rendered
to the Company and its affiliates, the Company wishes to issue to L&G 34,482.76
Units (the "Issued Units"), representing a 3.03% Percentage as of the Effective
Date, and L&G wishes to be issued the Issued Units, pursuant to the terms

         WHEREAS, the Company, Geiger and Muller wish for Geiger to bear the
dilution suffered as a result of the issuance of 11,494.25 of the Issued Units
to L&G (the "Assigned Units");

         NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby expressly acknowledged, the parties hereto hereby
agree as follows:

                                A G R E E M E N T

1. Contribution of Units Held by Geiger. As of the Effective Date, Geiger shall
contribute 11,494.25 of the Units held by Geiger to the Company. Accordingly,
immediately after such contribution, there shall be 11,494.25 fewer Units

2. Issuance of the Issued Units. As of the Effective Date, effective immediately
following the contribution described in Section 1 above, the Company shall issue
the Issued Units to L&G, subject to the conditions and restrictions contained in
this Agreement. L&G shall be considered a Member of the Company as of the
Effective Date. The Issued Units shall entitle L&G to a share of the profits and
losses of the Company after the Effective Date, and all distributions made with
respect thereto, but shall not entitle L&G to any interest in the capital of the
Company as of the Effective Date, which capital L&G and the Company hereby agree
has a fair market value equal to One Million Nine Hundred Eighty Thousand
Dollars ($1,980,000) as of the Effective Date.

3. Antidilution Protection. The Percentage represented by the Issued Units shall
not be diluted below 3% with respect to: (a) any issuance of Units by the
Company to the person hired to serve as the chief financial officer of the
Company; (b) any issuance of Units by the Company to the person hired to serve
as president of The Ultimate Band List, LLC (the "UBL"); or (c) the first Five
Million Dollars ($5,000,000) of additional capital contributions made following
the Effective Date to the Company or any of its subsidiaries, including, without
limitation, the UBL; provided that such additional capital contributions (other
than by Intel Corporation) are made either (i) based upon a valuation of the
applicable entity that is no less than the valuation upon which any prior
capital contribution was made, or (ii) pursuant to the exercise of an option

<PAGE>   2

or warrant the exercise price of which on the date of grant was not based upon a
valuation of the applicable entity that was less than the valuation upon which
any capital contribution prior to the date of the grant was made.

4. Drag Along Obligation. If the Founders find a third party buyer for all or
any portion of their Units (whether such sale is by way of purchase of assets or
Units, merger, recapitalization or other form of transaction), then, at the
request of the Founders, L&G shall sell the same percentage of the Units then
held by it to such third party on the same terms and conditions as apply to the
sale by the Founders. L&G agrees timely to take such other actions as the
Founders may reasonably request in connection with the approval of the
consummation of such sale, including, without limitation, voting all Units in
favor of such sale and waiving any dissenters' rights, executing such
agreements, powers of attorney, voting proxies or other documents and
instruments as may be necessary or desirable to consummate such sale, and, in
the event that such sale is structured as a recapitalization, transferring and
retaining such percentages of Units as may be requested by the Founders. The
foregoing obligation shall survive the Company's initial public offering.

5. Investment Representations.

         (a) The Company represents and warrants to L&G that the issuance of the
Issued Units has been duly and validly authorized and will not violate the terms
of any agreement to which the Company is a party.

         (b) L&G represents and warrants to the Company as follows:

             (i) L&G is acquiring the Issued Units for L&G's own account and not
with a view to or for sale in connection with any distribution thereof.

             (ii) L&G (A) is familiar with the business of the Company, (B) has
had an opportunity to discuss with representatives of the Company the condition
of and prospects for the continued operation and financing of the Company and
such other matters as L&G has deemed appropriate in considering whether to
invest in the Issued Units, and (C) has been provided access to all available
information about the Company requested by L&G.

             (iii) L&G understands that the Issued Units have not been
registered under the Securities Act of 1933 (the "Act") or registered or
qualified under the securities laws of any state and that L&G may not sell,
assign, dispose, or otherwise transfer the Issued Units or the Assigned Units
unless they are subsequently registered under the Act and registered or
qualified under applicable state securities laws, or unless an exemption from
such registration and qualification is available.

             (iv) L&G has the right to enter into this Agreement and to grant
the rights granted by L&G herein.

6. Condition Precedent to Issuance. The issuance of the Issued Units shall not
be effective until L&G shall have agreed to be bound by the terms of the
Operating Agreement.

7. Entire Agreement. This Agreement and the Operating Agreement together
constitute the entire agreement and understanding among the parties pertaining
to the subject matter hereof and supersede any and all prior agreements, whether
written or oral, relating thereto.

<PAGE>   3

8. Governing Law. This Agreement shall be governed by and construed and enforced
in accordance with the internal substantive laws (and not the laws of choice of
laws) of the State of California.

9. Costs. If either party brings any legal action against the other to enforce
its rights under this Agreement, the prevailing party in such dispute shall be
entitled to recover from the other party all reasonable fees, costs and expenses
actually incurred in enforcing its rights under this Agreement including,
without limitation, the reasonable fees and expenses of attorneys, accountants
and expert witnesses, which shall include, without limitation, all fees, costs
and expenses of appeals and of enforcement.

10. Amendments. This Agreement may be amended only by a written agreement
executed by all of the parties hereto.

11. Governing Law. This Agreement shall be interpreted, construed and governed
by the laws of the State of California, excluding its laws and principles
relating to the conflict of laws.

12. Assignment. This Agreement and the rights and obligations of the Company and
L&G hereunder are not assignable without the written consent of the other

13. Counterparts. This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be an original, but all of
which together shall constitute one and the same instrument.

<PAGE>   4

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

"L&G"                                            "COMPANY"

L&G Associates                                   ARTISTdirect, LLC

By:  /s/ Allen D. Lenard                         By:  /s/ Marc Geiger
    ---------------------------                      ---------------------------
    Allen D. Lenard                                    Marc Geiger
                                                 Its:  Member


 /s/ Marc Geiger                                 By:  /s/ Donald Muller
-------------------------------                      ---------------------------
Marc Geiger                                            Donald Muller
                                                 Its:  Member


 /s/ Donald Muller
Donald Muller