Strategic Licensing Agreement - ARTISTdirect Inc. and Sony Music
STRATEGIC LICENSING AGREEMENT
Agreement made as of December 6, 1999, between ARTISTdirect, Inc., 17835 Ventura
Boulevard, Suite 310, Encino, California 91316 (hereinafter "ARTISTdirect" or
"you") and Sony Music, a Group of Sony Music Entertainment Inc., 550 Madison
Avenue, New York, New York 10022-3211 (hereinafter "Sony").
WHEREAS, ARTISTdirect is in the business of producing, designing and
maintaining an integrated network of music entertainment websites;
WHEREAS, ARTISTdirect acknowledges the need to obtain a license
enabling it to transmit to end-users intellectual property and content owned and
controlled by Sony, and Sony desires to grant such license to ARTISTdirect on
the terms hereof, solely for use on ARTISTdirect Sites and solely for the
purpose of promoting the sale of Phonograph Records or for such other uses as
may be approved by Sony; and
WHEREAS, Sony owns and controls intellectual property and content,
including various Master Recordings featuring the performances of various Sony
recording artists (each, a "Sony Artist") and related Artwork, and the
intellectual property rights therein.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. TERM AND TERRITORY
1.01. The term of this license agreement ("Term") will begin on the
date hereof, and will continue for a period ending on December 31, 2001, unless
sooner terminated pursuant to Article 9 below.
1.02. The territory of the License is the United States ("Territory").
Notwithstanding the preceding sentence, Sony hereby acknowledges and agrees that
the license granted herein includes the right to exploit the Sony Content
licensed to you hereunder via the Internet, which by its nature extends beyond
the Territory. You shall not be deemed in breach of this license agreement if
the unintended effect and unavoidable consequence of your transmitting the Sony
Content to an end-user in the United States via the ARTISTdirect Network as
permitted herein results in Internet users located outside the United States
accessing the Sony Content (i.e., viewing the Artwork or listening to the Sound
Clips) directly from Web Sites that are a part of the ARTISTdirect Network
located in the Territory. For the avoidance of doubt, you shall not be entitled
to transmit any Sony Content other than via the ARTISTdirect Network as
permitted herein hosted and maintained at an Internet server residing in the
United States.
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2. GRANT OF RIGHTS; SOUND CLIP AND ARTWORK UPLOAD RESTRICTIONS AND
PROCEDURES
2.01. (a) Only in respect of the rights Sony (or its
Licensees, as the case may be) owns or controls in and to the Sound Clips and
the Artwork (individually and collectively, the "Sony Content"), and subject to
all of the terms and conditions of this license agreement, Sony (on behalf of
itself and its Licensees) grants to you a non-exclusive, limited license during
the Term and throughout the Territory to use Sony Content for sole purpose of
serving the Sony Content relating to the Sony Artist concerned to end-users in
conjunction with and as a part of the Web Site hosted on the ARTISTdirect
Network for or relating to the Sony Artist concerned, which Web Site contains an
online offer to end-users in the United States for the mail order fulfillment of
Phonograph Records distributed by Sony containing the featured performances of
such Sony Artist, provided that such Web Site contains a Buy Link in close
proximity to the corresponding Sony Content (the "License"). For the avoidance
of doubt, the License includes a non-exclusive, limited license during the Term
and throughout the Territory to reproduce as part of the Artwork any of Sony's
trademarks, trade names and logos as they are embodied in the Artwork.
(b) Omitted without implication.
(c) You shall not include on the ARTISTdirect Network at any
time more than (i) five (5) Sound Clips from any one (1) album or (ii) one (1)
Sound Clip in respect of each Sony Recording.
(d) (1) Each Sound Clip shall be transmitted to end-users
solely by so-called "streaming" technology (i.e., technology which transmits and
plays or displays, as applicable, the Sound Clip concerned to remote users in
real time). For the avoidance of doubt, examples of such so-called "streaming"
technology as of the date hereof include RealNetworks' RealAudio, Microsoft's
Windows Media Audio, and so-called "WAV" files. Neither you nor any other Person
shall create or facilitate the creation of "downloadable" copies of any Sony
Recording.
(2) Provided that you have used commercially
reasonable efforts to prevent the creation of "downloadable" copies of any Sony
Recording embodied in each Sound Clip and have used a so-called "streaming"
technology that is designed to prevent the facilitation of or circumvention of
such so-called "streaming" technology the end result of which may be the
creation of "downloaded" copies of any Sony Recording, you shall not be deemed
to have breached the foregoing provisions of section 2.01(d)(1) above. In the
event that you become aware that the so-called "streaming" technology employed
by you is capable of such facilitation or circumvention and/or is otherwise
resulting in the creation of "downloaded" copies of any Sony Recording, you
shall immediately advise Sony thereof. Upon being so advised by you, or,
alternatively, upon Sony's advising you that Sony has become aware that the
so-
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called "streaming" technology employed by you is capable of such facilitation or
circumvention and/or is otherwise resulting in the creation of "downloaded"
copies of any Sony Recording, you shall take such steps and give Sony such
assurances as Sony may deem reasonably satisfactory evidencing your plans to
prevent the possibility of the creation of such "downloaded" copies of the Sony
Recordings concerned on a prospective basis. In the event that Sony advises you
that such steps and/or assurances are not so reasonably satisfactory to Sony in
any instance(s), you shall then be required to immediately remove the Sony
Content concerned from all Web Sites on the ARTISTdirect Network.
2.02. (a) In the case of each Sony Recording you wish to use on the
ARTISTdirect Network, you shall use your reasonable best efforts to determine
the so-called "hook" of the Sony Recording concerned, and to use a Sound Clip of
such so-called "hook"; provided, however, that Sony may designate such so-called
"hook" in each instance and require you to include a Sound Clip embodying such
so-called "hook" (in lieu of any other Sound Clip). Notwithstanding the
foregoing provisions of this subparagraph 2.02(a), in the event of any dispute
between what Sony determines to be the so-called "hook" of the Sony Recording
concerned and what the Sony Artist concerned determines to be the so-called
"hook" of the Sony Recording concerned, the decision of the Sony Artist
concerned shall be deemed the so-called "hook" of the Sony Recording determined
by Sony for the purposes hereof, provided that in each instance you secure and
deliver to Sony the written consent of the Sony Artist concerned which specifies
with reasonable particularity the so-called "hook" as determined by such Sony
Artist.
(b) You shall also be required to include on the ARTISTdirect
Network Sound Clips of particular Sony Recordings which Sony may designate from
time to time, promptly following Sony's request therefor. Notwithstanding the
foregoing provisions of this subparagraph 2.02(b), in the event that Sony so
designates any particular Sony Recording for such inclusion on the ARTISTdirect
Network and the Sony Artist concerned objects to Sony's selection of such Sound
Recording for such purpose, the decision of the Sony Artist concerned shall be
deemed Sony's selection for the purposes hereof, provided that in each instance
you secure and deliver to Sony the written consent of the Sony Artist concerned
which specifies with reasonable particularity the Sony Recording desired by such
Sony Artist.
3. OTHER LIMITATION OF RIGHTS
3.01. (a) The License is limited to the use of the Sony Content solely
in the manner set forth in Article 2 above and this Article 3. Any and all other
rights in connection with the Sony Content are specifically reserved by Sony.
(b) You warrant and represent that, except as expressly set
forth herein (i) the Sony Content will not be edited, modified or otherwise
altered (except to the extent required to create Sound clips derived from Sony
Recordings), (ii) you will not include the Sony Content other than in computer
files created for use in accordance
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with paragraph 2.01 above, and (iii) you shall be solely responsible for any and
all costs, fees, expenses or other charges in connection with the permitted uses
of the Sony Content permitted hereunder (excluding any audio Record royalty
payments Sony may be required to make, if any, under any agreement to which Sony
is a party or is honoring in connection with the sale of Phonograph Records
embodying the Sony Content concerned, but including (x) any monies which may be
required to be paid to labor unions and guilds with appropriate jurisdiction and
(y) Persons owning or controlling an interest in musical compositions embodied
in Sony Content for the right to use such musical compositions). Sony shall use
reasonable efforts to cause Sony/ATV Music Publishing LLC ("Sony/ATV") to
negotiate with you in good faith regarding a license for the right under
copyright to reproduce and/or publicly perform musical compositions owned and
controlled by Sony/ATV which are embodied in Sound Clips and Videos licensed to
you under the License in accordance with industry standards and the arms-length
market for such licenses; provided, however, that in no event shall you be
required to pay to Sony/ATV consideration in respect of any such license in
excess of the consideration then being charged by Sony/ATV to any other third
party for comparable uses of such musical compositions.
3.02. You will not sublicense, assign or convey in any manner any
rights under this license agreement, including, but not limited to, the right to
use the Sony Content in conjunction with the ARTISTdirect Network, except to a
Person owning or acquiring all or substantially all of your stock or assets. No
Sony Content, Sony Recordings or Sony Artwork provided to you hereunder will be
sold, licensed or otherwise conveyed by you or on your behalf to others, except
to a Person owning or acquiring all or substantially all of your stock or
assets.
3.03. Omitted without implication.
3.04. (a) You shall include on all Web Sites containing Sony Content in
the ARTISTdirect Network: (i) The title of the musical composition embodied in
the Sony Recording concerned and the name of the artist performing such
composition, (ii) the appropriate copyright (P) and (c) notices applicable to
each item of Sony Content used on the Web Site concerned, in close juxtaposition
to the title(s) of the Sony Recordings concerned, and (iii) the legend:
"WARNING: All rights reserved. Unauthorized duplication is a violation of
applicable laws." The items prescribed in clauses (i) and (ii) will be included
on the same page(s) of the underlying musical compositions and Recordings
licensed to you by third-parties in an easily legible manner and not less than
the size, prominence and type style of such musical compositions and such
Recordings licensed to you by third-parties.
3.05. As between you and Sony, the Sony Recordings, all performances
embodied thereon, the Sony Content, and all copyrights and other rights in and
to the Sony Recordings and Sony Content are the sole property of Sony and shall
remain the sole and exclusive property of Sony. You warrant, represent and agree
that you will not, directly or indirectly, sell or otherwise dispose of, pledge,
mortgage or in any way
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encumber the Sony Recordings or any other related materials licensed to or
created by you with respect thereto.
3.06. Upon termination of the License, or at the termination or
expiration of the Term, or if any Sony Content cease for any reason to be
subject to the License, all rights herein granted to you to include the Sony
Content concerned on the ARTISTdirect Network shall forthwith terminate;
provided, however, that in the event that any Sony Content cease for any reason
to be subject to the License, such termination shall be effective five (5)
business days following the date of Sony's notice to you of the cessation
concerned. You shall thereafter have no right to include such Sony Content on
the ARTISTdirect Network. You shall promptly cease to use any computer files and
Sound Clips constituting Sony Content then in your possession or control and
used in conjunction with the ARTISTdirect Network (together with all master
tapes of Sony Recordings and other reproducing devices relating thereto), and
shall promptly thereafter furnish Sony with a sworn affidavit confirming that
you shall not at any time sell, transfer, assign, or convey, or send, transmit
or copy by any means or medium, to any Person, any of such computer files.
Within sixty (60) days of any such termination, you will cause any computer
files embodying the Sony Content not in your possession or control at the time
of termination to be returned to you and you shall promptly thereafter furnish
Sony with a sworn affidavit confirming that you shall not at any time sell,
transfer, assign, or convey, or send, transmit or copy by any means or medium,
to any Person, any of such computer files.
3.08. Except as expressly provided for herein, you may not use the Sony
Content for any original programming, products or marketing campaigns of any
type or nature, including but not limited to use in any games or trivia
contests, nor may you exploit the Sony Content in any commercial on-line
services, interactive television, telephone, cable or other technology or
format, whether now known or hereafter created.
3A. ADDITIONAL SONY CONTENT
3A.01. During the Term, upon ARTISTdirect's request, Sony shall
consider in good faith any reasonable request made by ARTISTdirect to license to
ARTISTdirect additional copyrighted materials owned and controlled by Sony not
licensed to ARTISTdirect pursuant to Articles 2 and 3 of this agreement (the
"Additional Sony Content") for use in connection with promotions of Sony Artists
conducted by ARTISTdirect on the ARTISTdirect Network.
3A.02. (a) Reference is hereby made to the ARTISTchannel Site for the
Sony Artist [***]* are individually and collectively referred to herein as the
"Qualifying ARTISTchannel Sites"; [***]* are individually and collectively
referred to herein as the "Qualifying Sony Artists".)
(b) Only in respect of the rights Sony (or its Licensees, as the
case may be) owns or controls, and subject to all of the terms, conditions
limitations and restrictions of this license agreement applicable to Sony
Content, in addition to and not in lieu of the License as it pertains to the use
of Sony Content as permitted elsewhere herein on the Qualifying ARTISTchannel
Sites, Sony (on behalf of itself and its Licensees) grants to you a
non-exclusive, limited license during the Term and throughout the Territory to
include the following on the Qualifying ARTISTchannel Sites for the Qualifying
Sony Artist concerned for the limited purposes prescribed in sections
3A.02(b)(1), (2) or (3) below:
(1)(A) Images of the front album cover art, only, of the
most recent album released by Sony in the United States
consisting entirely of the featured performances of the
Qualifying Sony Artist concerned, to be incorporated into the
"look and feel" (i.e., the basic visual elements and
presentation) of such Qualifying ARTISTchannel Site. To the
extent, if at all, that Sony has the right to grant to you the
right to make a derivative work containing such images as so
incorporated, you shall have the right to make a derivative
work containing such images as so incorporated, provided that
you have requested Sony's permission to do so in writing in
each instance and Sony has agreed to grant the derivative
rights concerned to you in each instance.;
(B) Notwithstanding the first sentence of subsection
3A.02(b)(1)(A) above, solely in connection with the [***]*, such
license shall include all images of the album art for the most
recent such album, whether or not such album art is the front
album cover art, solely to the extent used by you on the [***]*
as of the date hereof, it being understood and agreed that any
future changes in respect thereof shall require Sony's consent
in each instance unless the changes are otherwise in accordance
with the terms prescribed in subsection 3A.02(b)(1)(A) above.;
(2) Excerpts from Videos produced by Sony consisting
entirely of the featured performances of the Qualifying Sony
Artist concerned, subject to the following conditions: (i) such
excepts may be no longer than thirty (30) seconds in running
time, (ii) such excerpts must be for promotional uses only
(i.e., at no-charge), and (iii) such excerpts shall be
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* Confidential treatment has been requested for the bracketed portion. The
confidential redacted portion has been omitted and filed separately with the
Securities and Exchange Commission.
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transmitted to end-users solely by so-called "streaming"
technology (i.e., technology which transmits and plays or
displays, as applicable, the Video excerpt concerned to remote
users in real time). Neither you nor any other Person shall
create or facilitate the creation of "downloadable" copies of
any such Video excerpts. Provided that you have used
commercially reasonable efforts to prevent the creation of
"downloadable" copies of any such Video excerpts and have used a
so-called "streaming" technology that is designed to prevent the
facilitation of or circumvention of such so-called "streaming"
technology the end result of which may be the creation of
"downloaded" copies of any such Video, you shall not be deemed
to have breached the foregoing provisions of section
3A.02(b)(2). In the event that you become aware that the
so-called "streaming" technology employed by you is capable of
such facilitation or circumvention and/or is otherwise resulting
in the creation of "downloaded" copies of any Video, you shall
immediately advise Sony thereof. Upon being so advised by you,
or, alternatively, upon Sony's advising you that Sony has become
aware that the so-called "streaming" technology employed by you
is capable of such facilitation or circumvention and/or is
otherwise resulting in the creation of "downloaded" copies of
any Video, you shall take such steps and give Sony such
assurances as Sony may deem reasonably satisfactory evidencing
your plans to prevent the possibility of the creation of such
"downloaded" copies of the Videos concerned on a prospective
basis. In the event that Sony advises you that such steps and/or
assurances are not so reasonably satisfactory to Sony in any
instance(s), you shall then be required to immediately remove
the Videos concerned from all Web Sites on the ARTISTdirect
Network.; and
(3) The most recently produced Video produced by Sony
consisting entirely of the featured performances of the
Qualifying Sony Artist concerned, subject to the following
conditions: (i) such Video may shown in its entirety, provided
that it may be made available only for a period of two (2)
consecutive weeks, which two (2) week period commences on the
date that is one (1) week after the date the Video concerned is
submitted to MTV in the United States; (ii) such Video shall be
transmitted to end-users solely by so-called "streaming"
technology (i.e., technology which transmits and plays or
displays, as applicable, the Video excerpt concerned to remote
users in real time). Neither you nor any other Person shall
create or facilitate the creation of "downloadable" copies of
any such Video excerpts. Provided that you have used
commercially reasonable efforts to prevent the creation of
"downloadable" copies of any such Video excerpts and have used a
so-called "streaming" technology that is designed to prevent the
facilitation of or circumvention of such so-called "streaming"
technology the end result of which may be the creation of
"downloaded" copies of any such Video, you shall not be deemed
to have breached the foregoing provisions of section
3A.02(b)(3). In the event that you become aware that the
so-called "streaming" technology employed by you is capable of
such facilitation or circumvention and/or is otherwise resulting
in the creation of "downloaded" copies of any Video, you shall
immediately advise Sony thereof. Upon being so advised by you,
or, alternatively, upon Sony's advising you that Sony has become
aware that the so-called "streaming" technology employed by you
is capable of such facilitation or circumvention and/or is
otherwise resulting in the creation of "downloaded" copies of
any Video, you shall take such steps and give Sony such
assurances as Sony may deem reasonably satisfactory evidencing
your plans to prevent the possibility of the creation of such
"downloaded" copies of the Videos concerned on a prospective
basis. In the event that Sony advises you that such steps and/or
assurances are not so reasonably satisfactory to Sony in any
instance(s), you shall then be required to immediately remove
the Videos concerned from all Web Sites on the ARTISTdirect
Network.
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4. CONSIDERATION
4.01. In consideration of the rights granted to you hereunder, each Web
Site hosted on the ARTISTdirect Network containing Sony Content or any of the
elements described in sections 3A.03(b)(1), (2) or (3) above shall at all times
during the Term contain an active link to a Web Site created, hosted and
maintained by Sony in respect of such Sony Artist (each, a "Sony Artist Site"),
if any. Each such link shall be solely to such locations and/or addresses on the
Sony Artist Site as Sony shall designate in writing in each instance, and shall
be equal in size and prominence as the link from the corresponding Sony Artist
Site to such ARTISTdirect Network Web Site placed by Sony pursuant to paragraph
4A.01 below.
4.02 If at any time during the Term any third party receives any
consideration in connection with the licensing or other furnishing to you of any
digital sound files of Phonograph Records embodying Recordings that are not Sony
Recordings of no greater than thirty (30) seconds in length (or, solely in the
case of Recordings in the classical or jazz genre, no greater than sixty (60)
seconds in length) ("Third Party Sound Clips") or so-called "thumbnail" images
of the front album cover art used in the packaging of Phonograph Records
containing Recordings that are not Sony Recordings ("Third Party Artwork") used
or to be used in connection with the ARTISTdirect Network, or any rights
therein, which consideration is more favorable to such third party than the
consideration accorded to Sony hereunder, then such more favorable consideration
shall be deemed immediately accorded to Sony and incorporated in this license
agreement on a prospective basis only. You represent and warrant that, as of the
date hereof, no record label, artist or other third party has received any such
more favorable consideration.
4.03. At all times during the Term, ARTISTdirect shall maintain
standard management reporting systems regarding the ARTISTdirect Network, and
will prepare for Sony monthly management reports to the extent reasonably
available to you, which may include such information as usage of Sound Clips
containing Sony Recordings and the correlation between such usage and sales of
Phonograph Records by you. Each such monthly management report shall be
delivered to Sony by no later than five (5) business days following the calendar
month in respect of which the monthly management report concerned covers. During
the Term, you and Sony shall discuss in good faith incorporating such additional
information as the parties may mutually agree to be included in such monthly
management reports.
4A. CROSS-MARKETING OPPORTUNITIES
4A.01. Each Sony Artist Site for a Sony Artist with a corresponding
ARTISTchannel Site on the ARTISTdirect Network shall at all times during the
Term contain an active link to the ARTISTchannel Site for the Sony Artist
concerned containing Sony Content relating to such Sony Artist, or, if there is
no ARTISTchannel Site for the Sony Artist concerned containing Sony Content
relating to such Sony Artist, the ARTISTchannel Store for the Sony Artist
concerned. Each such link shall be solely to such locations and/or addresses on
the ARTISTdirect Network as you shall designate in writing in each instance, and
shall be equal in size and prominence as the link from the corresponding
ARTISTdirect Network Web Site to such Sony Artist Site placed by you pursuant to
paragraph 4.01 above.
4A.02. During the Term, Sony shall consider in good faith any
reasonable request made by ARTISTdirect regarding the participation of Sony in
promotions involving Sony Artists that have an ARTISTchannel Site via the
ARTISTdirect Network to help market Phonograph Records containing such Sony
Artist's performances and the cross-promotion of the ARTISTchannel Site, the
Sony Artist Site for the Sony Artist concerned and the other Internet properties
of ARTISTdirect and Sony.
5. TRADEMARKS, TRADE NAMES, NAMES, LIKENESSES, CREDITS AND MARKETING
LIMITATIONS
5.01. You may advertise the Sony Recordings in connection with the
ARTISTdirect Network, provided that you have obtained the written consent of the
Sony Artist concerned in connection with such advertisements. You agree that
you will not use Sony's trademarks or logotypes, or Sony's name, directly or
indirectly, except as provided in paragraphs 2.01 and 3.04 above, and paragraphs
5.02 and 5.03 below, in conjunction with the License granted herein.
5.02. Omitted without implication.
5.03. If you become aware of any unauthorized manufacture, advertising,
distribution, lease or sale by any third party of the Sony Recordings, or any
other Master Recordings the copyrights to which are owned by Sony or its
licensors, you shall promptly notify Sony thereof and shall cooperate with Sony,
at Sony's cost and expense, in the event that Sony commences any action or
proceeding against such third party.
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6. Omitted without implication.
7. ADDITIONAL REPRESENTATIONS, WARRANTIES AND INDEMNITIES
7.01. You warrant and represent that:
(a) You have the right and power to enter into and fully
perform this license agreement and to make the commitments you make herein, and
have obtained or will obtain all necessary licenses, permissions and consents.
(b) Sony shall not be subject to any costs, fees or other
charges (including, without limitation, any royalties) in respect of
ARTISTdirect's use of any Sound Clips and/or Artwork files or in respect of the
ARTISTdirect Network.
(c) You are fully-qualified to digitize and create Sound Clip
and Artwork files and to operate the ARTISTdirect Network as described herein.
(d) Subject to clause (i) of the last sentence of paragraph
9.01 below, you own, and will own at all times during the Term, all right, title
and interest in and to the ARTISTdirect Network, and all copyrights and other
rights therein (other than the underlying rights in the content and intellectual
property included therein, to the extent such content and intellectual property
is owned by third parties and licensed to you), throughout the Territory, free
and clear of any and all claims or encumbrances whatsoever. Subject to the
representations and warranties made by Sony hereunder, the operation and use of
ARTISTdirect Network for the purposes described herein, do not, and at no time
shall during the Term, violate any law (including, without limitation, any
federal law or regulation) or infringe upon or violate the rights of any Person.
(e) You have obtained from third parties all licenses and
other rights necessary in order to create and operate the ARTISTdirect Network.
(f) You are a corporation duly organized and in good standing
under the laws of the State of Delaware.
7.02. You will at all times indemnify and hold harmless Sony and any
licensor of Sony from and against any and all claims, damages, liabilities,
costs and expenses (including reasonable legal expenses and counsel fees)
arising out of any breach or alleged breach by you of any representation,
warranty or agreement made by you herein, including, without limitation, your
representation and warranty to secure and pay for all third-party licenses,
permissions and consents. You will reimburse Sony and/or its licensors on demand
for any payment made at any time after the date hereof in respect of any
liability or claim in respect of which Sony or its licensors are entitled to be
indemnified.
7.03. Sony will at all times indemnify and hold you harmless from and
against any and all claims, damages, liabilities, costs and expenses (including
reasonable legal expenses and counsel fees) arising out of any breach by Sony of
any representation or warranty made by Sony herein up to, in the aggregate,
$200,000 plus any financial consideration paid by you to Sony under this
agreement. Sony will reimburse you on demand for any payment made at any time
after the date hereof in respect of any liability or claim in respect of which
you are entitled to be indemnified, up to the amount prescribed in the preceding
sentence.
7A. SONY'S WARRANTIES AND REPRESENTATIONS
7A.01. Sony warrants and represents that:
(a) Sony has the right and power to enter into and fully perform this
license agreement.
(b) Subject to the terms, conditions, restrictions and limitations
provided elsewhere herein, Sony owns or controls all rights in and to the Sony
Content necessary to grant you the License under this agreement.
8. DEFINITIONS
8.01. (a) "Web Site" - means that specific computerized area and
system, including any computer servers, transmission systems, electronic files,
and electronic data retrieval systems, associated with the international
computer network known as the "Internet" and more specifically the "World Wide
Web".
(b) "ARTISTchannel Site" - an English language, Portuguese
language and/or Spanish language Web Site created, maintained and hosted by
ARTISTdirect in the United States featuring, among other elements, music, music
related merchandise and other music related content (e.g., so-called "samples"
of sound recordings, Phonograph Records, collectibles, artist-hosted clubs, fan
clubs, message boards, news, tour information and special offers) relating to
one (1) musical recording artist, which Web Site is referred to on the
applicable Web Site as the "official" Web Site of the musical recording artist
concerned and does not constitute an ARTISTchannel Store for such musical
recording artist. Each ARTISTchannel Site is individually designed for, and is
owned by (other than any intellectual property which may be owned by a third
party) the musical recording artist featured on the Web Site concerned pursuant
to a
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contractual arrangement between ARTISTdirect and such musical recording artist.
For the avoidance of doubt, any Web Site that is not referred to such Web Site
as the "official" Web Site of the musical recording artist concerned is not an
ARTISTchannel Site.
(c) "ARTISTchannel Superstore" - an English language,
Portuguese language and/or Spanish language Web Site created, maintained and
hosted by ARTISTdirect in the United States featuring online distribution of
products and services such as Phonograph Records, digital downloads of Master
Recordings, merchandise, tickets, tour memorabilia and collectible items
relating to more than one (1) musical recording artist.
(d) "ARTISTchannel Store" - an English language, Portuguese
language and/or Spanish language Web Site that is not an ARTISTchannel Site
created, maintained and hosted by ARTISTdirect in the United States featuring
online distribution of products and services relating to one (1) musical
recording artist, such as Phonograph Records, digital downloads of Master
Recordings, merchandise, tickets, tour memorabilia and collectible items.
(e) "ARTISTdirect Network" - an integrated network of English
language, Portuguese language and/or Spanish language Web Sites created,
maintained and hosted by ARTISTdirect in the United States, consisting solely of
(i) ARTISTchannel Sites, (ii) the ARTISTchannel Superstore, (iii) ARTISTchannel
Stores, and (iv) a comprehensive online music search engine and resource for
music information created, maintained and hosted by ARTISTdirect called "The
Ultimate Band List" located at "www.ubl.com" as the Uniform Resource Locator,
address or domain name (the "Ultimate Band List").
(f) "Buy Link" - an active link on a Web Site that is part of
the ARTISTdirect Network, which links such Web Site to a Web Site created,
maintained and hosted by ARTISTdirect in the United States that processes and
fulfills mail order sales of the Phonograph Records concerned to end-users in
the United States. For purposes of the preceding sentence, banner advertisements
that contain an active link to another Web Site shall not constitute an active
link with prominent and preferred placement.
8.02. "Artwork" - so-called "thumbnail" images of the front album cover
art, only, used in the packaging of the Records in which the Sony Recordings
concerned were originally released by Sony in the United States.
8.03. "Sound Clips" - digital sound files of Phonograph Records
embodying Sony Recordings. Solely with respect to Sony Recordings, such sound
files shall be no greater than thirty (30) seconds in length (except for Sony
Recordings in the classical or jazz genre, which shall be no
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greater than sixty (60) seconds in length), except as otherwise agreed upon in
writing by Sony for the particular Sony Recording concerned.
8.04. "Sony Recordings" - any audio-only sound recording embodied on
the selection of Phonograph Records listed within the United States catalogs of
Sony's Columbia, Epic, Sony Classical, WORK, 550 and Legacy labels or contained
in Sony's so-called "DJ mailing list", subject to paragraph 3.01.
8.05. "Master Recordings" or "Recordings" - every recording of sound,
whether or not coupled with a visual image, by any method and on any substance
or material, or in any other form or format, whether now or hereafter known,
which is used or useful in the recording, production and/or manufacture of
Records or for any other commercial exploitation.
8.06. "Records" - all forms of reproductions, transmissions or
communications of Recordings now or hereafter known, manufactured, distributed,
transmitted or communicated primarily for home use, school use, juke box use or
use in means of transportation, including, without limitation, Records embodying
or reproducing sound alone and Audiovisual Records. A "Phonograph Record" is a
Record as embodied by the manufacturer and/or distributor in a physical,
non-interactive Record configuration (e.g., vinyl LP's, cassettes, compact
discs, videocassettes) prior to its distribution to the consumer, as opposed to
the transmission or communication of a Record to the consumer prior to being
embodied in a physical Record configuration, whether or not it may at some point
be embodied in a physical Record configuration, by the consumer or under the
consumer's direction or control.
8.07. "Person" - any natural person, legal entity, or other organized
group of persons or entities. (All pronouns, whether personal or impersonal,
which refer to Persons include natural persons and other Persons.)
8.08. "Licensee" - the principal licensee of rights from Sony in the
country concerned, which licensee is owned wholly by Sony Corporation, directly
or indirectly.
8.09. "Video" - an audiovisual work owned or controlled by Sony
featuring, primarily, the audio soundtrack of one (1) Sony Recording.
9. DEFAULT
9.01. (a) If you fail to timely make payments and render statements to
Sony, and/or to make payments to third parties within ten (10) business days
after you receive notice from Sony of your failure to make such payment, render
such statement and/or make such payment to such third party, as the case may be;
or
(b) In the event of any breach by you or any of your
representations, warranties or obligations hereunder, which breach is not cured
promptly following Sony's notice to you thereof, or in the event that you fail
to fulfill any
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of your obligations hereunder, which failure is not cured promptly following
Sony's notice to you thereof; or
(c) In the event of your dissolution or the liquidation of
your assets, or the filing of a petition in bankruptcy or insolvency or for an
arrangement or reorganization by, for or against you, or in the event of the
appointment of a receiver or a trustee for all or a portion of your property, or
in the event that you shall make an assignment for the benefit of creditors or
become bankrupt or insolvent;
then, you shall be deemed in material breach and default hereof and Sony, in
addition to such other rights and remedies which Sony has at law or otherwise
under this license agreement, may upon notice to you, immediately terminate the
License and the Term without prejudice to any right or claims Sony may have.
Notwithstanding the foregoing: (i) Sony shall not exercise Sony's rights under
subparagraph 9.01(b) above if the default concerned is solely attributable to
any claims or encumbrances asserted against you (and are not asserted against
Sony or any of its licensees) resulting from a breach or alleged breach of your
representations and warranties under subparagraph 7.01(d) above solely insofar
as it pertains to copyrights and other rights in any content or intellectual
property or other property or rights of any Person not owned or controlled by
Sony or its licensees; and (ii) Sony shall not exercise Sony's rights under
subparagraph 9.01(c) above by reason of the filing of a petition against you by
a third party under Title 11 of the United States Code or any similar statute,
unless (A) Sixty (60) days elapse after the filing of the petition and the
petition is not dismissed by order of the court within that time; or (B) Sony
determines in Sony's sole judgment that deferment of exercise of the option
during that sixty (60) day period might jeopardize Sony's interests (e.g. Title
11 of the United States Code or any similar statute or law does not permit up to
sixty (60) days to so dismiss such petition.
10. NOTICES
10.01. Except as otherwise specifically provided herein, all notices
hereunder shall be in writing and shall be given by personal delivery,
registered or certified mail or telegraph (prepaid), at the addresses shown
above, or such other address or addresses as may be designated by either party.
Notices shall be deemed given when mailed or delivered to a telegraph office,
except that notice of change of address shall be effective only from the date of
its receipt. Each notice sent to Sony shall be directed to its Senior
Vice-President, Business Affairs and Administration, and a copy of each such
notice shall be sent simultaneously to Sony Music Entertainment Inc., Law
Department, 550 Madison Avenue, New York, New York 10022-3211, Attention: Senior
Vice President and General Counsel. Sony shall undertake to send a copy of each
notice sent to you to Allen D. Lenard, Esq., Lenard & Gonzalez, LLP, 1900 Avenue
of the Stars, 25th Floor, Los Angeles, California 90067, but Sony's failure to
send any such copy shall not constitute a breach of this agreement or impair the
effectiveness of the notice concerned.
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11. MISCELLANEOUS
11.01. This license agreement contains the entire understanding of the
parties relating to its subject matter. No change or modification of this
license agreement will be binding upon unless it is made by an instrument signed
by an officer of Sony. No change of this agreement shall be binding upon you
unless it is made by an instrument signed by you. A waiver by either party of
any provision of this license agreement in any instance shall not be deemed to
waive it for the future. All remedies, rights, undertakings, and obligations
contained in this license agreement shall be cumulative and none of them shall
be in limitation of any other remedy, right, undertaking, or obligation of
either party. The captions of the Articles in this agreement are included for
convenience only and shall not affect the interpretation of any provision.
11.02. Those provisions of any applicable collective bargaining
agreement between Sony and any labor organization which are required, by the
terms of such agreement, to be included in this license agreement shall be
deemed incorporated herein.
11.03. Sony may assign Sony's rights under this agreement in whole or
in part to any subsidiary, affiliated or controlling corporation, to any Person
owning or acquiring a substantial portion of the stock or assets of Sony, or to
any partnership or other venture in which Sony participates, and such rights may
be similarly assigned by any assignee. No such assignment shall relieve Sony of
any of Sony's obligations hereunder. Sony may also assign Sony's rights to any
of Sony's Licensees if advisable in Sony's sole discretion to implement the
license granted.
11.04. If Sony breaches any of its obligations hereunder, you shall
permit Sony a reasonable time to remedy such breach, and you shall not be
entitled to recover damages or terminate the Term by reason of such breach until
such reasonable time has passed.
11.05. THIS LICENSE AGREEMENT HAS BEEN ENTERED INTO IN THE STATE OF NEW
YORK, AND THE VALIDITY, INTERPRETATION AND LEGAL EFFECT OF THIS LICENSE
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITH
RESPECT TO THE DETERMINATION OF ANY CLAIM, DISPUTE OR DISAGREEMENT WHICH MAY
ARISE OUT OF THE INTERPRETATION, PERFORMANCE, OR BREACH OF THIS LICENSE
AGREEMENT. ANY PROCESS IN ANY ACTION OR PROCEEDING COMMENCED IN THE COURTS OF
THE STATE OF NEW YORK OR ELSEWHERE ARISING OUT OF ANY SUCH CLAIM, DISPUTE OR
DISAGREEMENT MAY, AMONG OTHER METHODS, BE SERVED UPON YOU BY DELIVERING IT OR
MAILING IT, BY REGISTERED OR CERTIFIED MAIL, DIRECTED TO THE ADDRESS FIRST ABOVE
WRITTEN OR SUCH OTHER ADDRESS AS YOU MAY DESIGNATE PURSUANT TO PARAGRAPH 10.01.
ANY SUCH PROCESS MAY, AMONG OTHER METHODS, BE SERVED UPON ANY
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PARTY WHO APPROVES, RATIFIES, OR ASSENTS TO THIS LICENSE AGREEMENT TO INDUCE
SONY TO ENTER INTO IT, BY DELIVERING THE PROCESS OR MAILING IT BY REGISTERED OR
CERTIFIED MAIL, DIRECTED TO THE ADDRESS FIRST ABOVE WRITTEN OR SUCH OTHER
ADDRESS AS THE PERSON CONCERNED MAY DESIGNATE IN THE MANNER PRESCRIBED IN
PARAGRAPH 10.01. ANY SUCH DELIVERY OR MAIL SERVICE SHALL BE DEEMED TO HAVE THE
SAME FORCE AND EFFECT AS PERSONAL SERVICE WITHIN THE STATE OF NEW YORK OR THE
JURISDICTION IN WHICH SUCH ACTION OR PROCEEDING MAY BE COMMENCED.
11.06. This license agreement shall not become effective until executed
by all proposed parties hereto. This license agreement may be executed in
counterparts and by facsimile signature, each of which shall be deemed an
original and all of which together shall constitute one (1) agreement.
12. PRESS RELEASES
12.01. Neither party hereto shall, without the consent of the other
party, issue any press release or make any other public announcement relating to
the transactions contemplated by (i) this agreement or (ii) the Stock Purchase
Agreement dated as of December __, 1999 between the parties and the other
Transaction Agreements, as defined in such Stock Purchase Agreement (the
"Investment Documents" and together with this agreement, the "Confidential
Information"), provided that any party may make any disclosure required to be
made by it under applicable law if it determines in good faith that it is
required to do so and gives prior notice to the other party, provided further
that ARTISTdirect shall provide Sony with a reasonable opportunity to review and
comment on the disclosure regarding the Confidential Information in
ARTISTdirect's registration statement in connection with its public offering.
ARTISTdirect further agrees to use reasonable efforts (i) To obtain confidential
treatment of the portions of this agreement and the Investment Documents
relating to pricing terms and commitment levels in connection with the filing of
such registration statement, and (ii) in connection with the filing of such
registration statement, to obtain confidential treatment of (x) each of the
provisions contained in Article 3A of this agreement, and (y) any and all other
terms contained in this agreement that are more favorable to ARTISTdirect than
the corresponding terms granted by ARTISTdirect to a similarly situated third
party record company or other Person.
SONY MUSIC, A Group of
Sony Music Entertainment Inc.
By: /s/ RON WILCOX
----------------------------------------
Senior Vice President
Business Affairs and Administration
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ARTISTDIRECT, INC.
By: /s/ MARC P. GEIGER
------------------------
Title: CEO
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