Sample Business Contracts

Webcasting Transmission License Agreement - Warner Music Group Inc. and ARTISTdirect Inc.

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         This Webcasting Transmission License Agreement ("Agreement"), dated as
of December 20, 1999, is made by and between Warner Music Group Inc. with its
principal offices at 75 Rockefeller Plaza, New York, NY 10019, ("Licensor"), and
ARTISTdirect, Inc., with its principal offices at 17835 Ventura Boulevard, Suite
310, Encino, California 91316 ("Licensee").

         WHEREAS, Licensee operates the Web Site that digitally transmits sound
recordings to the public;

         WHEREAS, Licensee wishes to obtain a license for certain transmissions
of sound recordings on the Web Site;

         WHEREAS, Licensee has agreed to pay a royalty and provide certain
additional consideration for such license, and Licensor and Licensee have agreed
upon such consideration and other terms, which are reflected in this Agreement;

         NOW, THEREFORE, and in consideration of the mutual promises contained
in this Agreement and for other good and valuable consideration, including the
consideration provided by Licensee in Section 3, the adequacy and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:


1.1    "Confidential Information" means information submitted to Licensor
       pursuant to Section 5.1, 5.2, 5.3 or 5.4.

1.2    "Excerpt" means a "Sample" (as defined in the Audio Sample License
       Agreement between Licensor and Licensee of even date herewith) where no
       more than 30 seconds thereof may be accessed by the Web Site User.

1.3    "First Transmission Date" means the date on which the Licensee makes the
       first Payable Transmission of a sound recording in the Repertory.

1.4    "License Fee Report" means a report required by Section 5.

1.5    "Payable Transmission" means each instance in which any portion of a
       sound recording of a musical work in the Repertory other than an Excerpt
       is delivered to a Web Site User via Web Site Transmissions (e.g., the
       delivery of any portion of a single track from a compact disc to one


<PAGE>   2

1.6    "Payable Transmission Rate" means the following:  [***]*.

1.7    "Repertory" consists of all copyrighted sound recordings, including sound
       recordings created during the term of this Agreement, in which Licensor
       has or will have during the term of this Agreement the right to license
       transmissions. Within sixty (60) days following the date of this
       Agreement, Licensor shall provide Licensee with a list of those entities
       that own or control sound recordings which Licensor shall have the right
       to license to Licensee for transmissions as provided hereunder. Such list
       of entities shall be as updated by Licensor from time to time by written
       notice from Licensor to Licensee.

1.8    "Sound recordings" means such term as it is defined in Section 17 U.S.C.
       Section 101.

1.9    "Territory" means the United States, its territories, commonwealths and

1.10   "Web Site" means any Internet site or Internet sites which are: (a) (i)
       majority-owned or wholly-owned or controlled by Licensee; and (ii)
       wholly-programmed and operated by Licensee; or (b) (i) operated and
       managed by Licensee and (ii) subject to comprehensive written web site
       agreements between Licensee and recording artists (or such recording
       artist's furnishing companies) ("Artists") of the type which Licensee
       typically enters into with recording artists as of the date hereof;
       provided, that such Artists are recording artists then-currently signed
       to exclusive recording agreements with affiliates of Licensor.

1.11   "Web Site Transmissions" means all digital audio transmissions to Web
       Site Users from or through the Web Site of stations on the Web Site
       created by Web Site Users in accordance with the parameters set out in
       Exhibit A ("Web Site User Stations"), and does not include digital audio
       transmissions made by any other means.

1.12   "Web Site Users" means all those who access the Web Site solely for
       personal consumer use.


       2.1    Licensor hereby grants to Licensee, during the term of this
       Agreement, subject to the limitations set forth below, a limited
       nonexclusive license to (a) transmit publicly any or all of the sound
       recordings in the Repertory, within the Territory, by means of Web Site
       Transmissions and (b) exhibit within the Territory album cover art in
       postage stamp size adjacent to artist, album title and sound recording
       title information with respect to a sound recording being transmitted
       pursuant to this Agreement on the Web Site; provided, in each case, that
       (i) Licensee complies with Section 17 U.S.C. 114(d)(2)(c)(i) and Section
       17 U.S.C. Section 1101 and all of the terms and conditions of this
       Agreement and (ii) the Web Site Transmissions comply with all
       non-financial terms negotiated or determined by the Copyright Arbitration
       Royalty Panel pursuant to Section 17 U.S.C. Section 114(f). In the event
       that compensation system set by the Librarian of Congress pursuant to
       Section 17 U.S.C. Section 114(f) would result in double payment to
       Licensor with respect to any Web Site Transmissions, then the parties
       shall negotiate in good faith an adjustment that will result in the
       Licensor only receiving the compensation provided for under this
       Agreement with respect to such Web Site Transmissions.

* 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.

<PAGE>   3

2.2    Nothing in this Agreement authorizes Licensee to grant to any other
       person or entity (including without limitation any Web Site User or any
       operator of another Web site), any right to reproduce by any means,
       method or process whatsoever, now known or hereafter developed, any of
       the sound recordings in the Repertory, including, but not limited to,
       transferring or downloading any such sound recordings to a computer hard
       drive, or otherwise copying the sound recording onto any other storage

2.3    Nothing in this Agreement authorizes Licensee to grant to any person or
       entity (including without limitation any Web Site User or any operator of
       another Web site) any right to transmit publicly, by means of digital
       transmission or otherwise, any of the sound recordings in the Repertory.

2.4    The licenses granted in this Agreement extend only to Licensee and the
       Web Site. This Agreement grants no rights to Licensee other than those
       expressly granted herein. Without limiting the generality of the
       foregoing, this Agreement does not grant to Licensee (a) any copyright
       interest in any sound recording; (b) any rights outside the Territory;
       (c) any trademark rights; or (d) any rights to any endorsement by
       Licensor or any other person.

2.5    Licensor represents and warrants to Licensee that it has the rights
       necessary to grant the licenses and other rights granted under this
       Agreement and will defend, indemnify and hold harmless Licensee its
       parent, subsidiaries or affiliates and their directors, officers,
       employees and agents from and against any and all claims, actions,
       liabilities, losses, damages, costs or expenses (whether direct or
       indirect, by contract, in tort, by operation of law or otherwise)
       incurred by or asserted or awarded against Licensee arising out of or in
       connection with a breach of any representation, warranty or covenant
       hereunder or any failure of Licensor to have the rights granted to
       Licensee pursuant to this Agreement.


3.1    For each calendar quarter of the term of this Agreement, Licensee shall
       pay Licensor, for the license granted in Section 2.1, an amount equal to
       the number of Payable Transmissions during that quarterly period
       multiplied by the Payable Transmission Rate.

3.2    Licensee shall pay a finance charge of one and one-half percent (1-1/2%)
       per month, or the maximum rate permitted by law, whichever is less, from
       the date due, on any required payment that is not made on or before its
       due date, without prejudice to any other rights Licensor may have in
       connection with such delinquency.

3.3    During the term of this Agreement, Licensee shall, within a reasonable
       time after Licensor's written request setting forth the applicable IP
       address, provide direct links, from the location on the Web Site where
       artist, album title, and sound recording title information for each sound
       recording is provided, (which shall be the same location on such Web Site
       where Web Site Users access the transmission of such sound recording), to
       one or more

<PAGE>   4

       Web sites that provide for direct sales of substantially all the sound
       recordings transmitted by Licensee on the Web Site, except to the extent
       that such sales are conducted directly by Licensee from the Web Site. In
       addition, at the option of Licensor, Licensee shall, within a reasonable
       time after Licensor's written request setting forth the applicable IP
       address, provide reasonably prominent "above the fold" direct links from
       the location on the Web Site where information regarding a particular
       recording artist is provided, (which shall be the same location on such
       Web Site where Web Site Users access the transmission of sound
       recordings), to a Web site operated by Licensor relating to the relevant
       recording artist.

3.4    During the term of this Agreement, Licensee shall post an announcement on
       the Web Site, in form and substance satisfactory to Licensor, concerning
       the license limitations contained in Sections 2.2, 2.3, and 2.4, and, if
       requested by Licensor, include a click wrap agreement in form and
       substance satisfactory to Licensor, for acknowledgement by Web Site

4.     TERM

4.1    The term of this Agreement commences on the First Transmission Date and
       ends on December 31, 2001, unless earlier terminated pursuant to this
       Section 4 or Section 8.

4.2    Either party may terminate this Agreement as to the other party if, at
       any time, such other party shall file in any court or agency pursuant to
       any statute or regulation of any state or country, a petition in
       bankruptcy or insolvency or for reorganization or for an arrangement or
       for the appointment of a receiver or trustee of the party or of its
       assets, or if such other party proposes a written agreement of
       composition or extension of its debts, or if such other party shall be
       served with an involuntary petition against it, filed in any insolvency
       proceeding, and such petition shall not be dismissed within sixty (60)
       days after the filing thereof, or if such other party shall propose or be
       a party to any dissolution or liquidation, or if such other party shall
       make an assignment for the benefit of creditors.

4.3    If technology becomes widely available that permits Web Site Users to
       create a separate, complete and usable copy of sound recordings
       transmitted by Licensee, then Licensee, upon notice from Licensor or
       otherwise obtaining information as to the existence of such technology,
       shall make all commercial efforts to prevent the use of such technology
       by Web Site Users. Licensee shall also implement technical protection
       measures, if available, to prevent the use of such technology by Web Site
       Users. In the event that such commercial efforts and technical measures
       fail to prevent Web Site Users from using such technology, then the
       Payable Transmission Rate shall no longer apply and the parties shall
       immediately enter into good faith negotiations to determine an
       appropriate increased Payable Transmission Rate.

4.4    Licensor may terminate this Agreement if Licensee transmits sound
       recordings using multicast technology and fails to maintain a control
       connection or other mechanism with Web Site Users that permits Licensee
       to count reliably the number of Payable Transmissions so that Licensor
       may reliably audit such count pursuant to Section 6.

<PAGE>   5


5.1    Licensee shall submit a quarterly License Fee Report to Licensor for each
       quarterly period during the term of this Agreement, by the twentieth day
       of the following quarter. Licensee and Licensor shall mutually agree upon
       a form of License Fee Report within sixty (60) days following the date of
       this Agreement. Such License Fee Report shall provide reasonably detailed
       information as to the number of Payable Transmissions during such
       quarterly period and shall be certified to be accurate by an officer of

5.2    During the term of this Agreement, Licensee shall provide Licensor with
       weekly reports, by the tenth day after the end of each week, regarding
       the sound recordings accessed by Web Sites Users during the preceding
       week. Such reports shall be in a form to be mutually agreed upon by
       Licensor and Licensee within sixty (60) days following the date of this
       Agreement. Such reports shall include information as to use by title;
       artist; album; label; catalogue number; UPC Code (by December 31, 1999);
       release date; ISRC code (when available); number of playing dates and
       times of transmission; duration of sound recording; and such additional
       information as Licensor reasonably requests; provided that such requests
       shall not be effective in less than sixty (60) days from the date of the
       request. In the event Licensee incurs additional actual out-of-pocket
       costs as a result of furnishing such additional information, such
       reasonable costs will be deducted from license fees payable for the
       relevant period(s).

5.3    During the term of this Agreement, Licensee agrees to submit such
       additional information as may be required under applicable rules and
       regulations of the Copyright Office, including without limitation 37
       C.F.R. Section 201.36.


6.1    Licensor shall have the right to examine Licensee's books and records,
       and Licensee agrees to obtain for Licensor the right to examine the books
       and records of any partner in, or co-publisher of, the Web Site, in order
       to verify any report required by this Agreement. Licensor may exercise
       this right no more than once per calendar year. Licensor shall give
       Licensee thirty (30) days' notice of its intention to conduct an
       examination. Licensee agrees to furnish all pertinent books and records,
       including electronic records, to Licensor's authorized representatives,
       during customary business hours. Such books and records shall be kept by
       Licensee in accordance with Generally Accepted Accounting Principles and
       shall be retained for at least three (3) years following expiration of
       the term of this Agreement. Notwithstanding the foregoing, Licensee shall
       not be required to provide Licensor with the access provided in this
       Section 6.1 if in the preceding twelve (12) months the Licensee's
       independent auditor has completed and signed an audit report for an audit
       that addresses all of the information that would have been requested by
       and made available to Licensor, in which event Licensee shall provide to
       Licensor the audit report, work papers and other information provided to
       such auditor.

6.2    Licensee agrees to provide a third-party Section  selected by Licensor
       (unless Licensee identifies a conflict of interest or other material fact
       that should disqualify the contractor)

<PAGE>   6

       with such reasonable additional information and reasonable access to
       Licensee's premises and equipment, and to cooperate with such contractor
       in making any inquiries of Licensee and third parties who provided
       products or services to Licensee, as shall reasonably be required for
       Licensor to verify the accuracy and completeness of the Licensee Fee
       Reports provided under Section 5, including without limitation Sections
       5.1 and 5.2.

6.3    Expenses for any examination conducted by Licensor under Sections 6.1 and
       6.2 shall be paid by Licensor unless such examination results in a
       determination by the auditor conducting such examination that Licensee's
       actual payments for the period examined were more than [***]* below the
       payments required under this Agreement, in which case Licensee shall pay
       the costs of the audit.

6.4    The exercise by Licensor of any rights under this Section 6 shall not
       prejudice any other rights or remedies of Licensor, including any other
       rights of Licensor to dispute any amounts owed to Licensor under this


7.1    Licensor shall provide access to Confidential Information only to its own
       employees, employees of its constituent companies and to an independent
       and qualified auditor retained by Licensor with respect to the
       verification of license fee payments.

7.2    Licensor shall not disclose or make any use of the Confidential
       Information except as permitted in Section 7.1 or as required by law. In
       the event Licensor believes it may be obligated by law to disclose any
       Confidential Information, it shall advise Licensee and cooperate with
       Licensee in seeking to limit the scope of such disclosure and making such
       disclosure subject to a protective order or similar device designed to
       maintain the confidentiality of the Confidential Information. Licensor
       shall implement procedures designed to safeguard all Confidential

7.3    Except as may be required by any law, statute, or governmental rule or
       regulation, neither party shall provide this Agreement, or disclose any
       of the terms and rates contained in this Agreement, to any person or
       entity without the prior written consent of the other party.

7.4    Neither party shall issue any press release or make any other public
       statement regarding this Agreement or the transactions contemplated
       herein without the prior written consent of the other party.


If either party fails to perform any of the material terms or conditions
required of it by this Agreement, the non-breaching party may, at its option,
give the breaching party notice to cure

* 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.

<PAGE>   7

such material breach or default. Such notice shall describe the nature of such
breach. If the breaching party does not cure within ten (10) business days of
any such notice, any further notice from the non-breaching party, and any
further transmissions shall be fully subject to the copyright owners' rights
under Section 17 U.S.C. Section 106(6), and the remedies in Section 17 U.S.C.
Section 501 et seq. No waiver by the breaching party of full performance by the
non-breaching party in any one or more instances shall be a waiver of the right
to require full and complete performance of this Agreement thereafter or of the
right to terminate this Agreement in accordance with this Section 8.

9.     NOTICES

All notices and other communications between the parties hereto shall be in
writing and deemed received (i) when delivered in person; (ii) upon confirmed
transmission by facsimile device; or (iii) five (5) days after deposited in U.S.
mails, postage prepaid, certified or registered mail, addressed to the other
party at the address set forth below (or such other address as such other party
may supply by written notice):

       Licensee:  Chief Financial Officer
                  ARTISTdirect, Inc.
                  17835 Ventura Boulevard
                  Suite 310
                  Encino, California 91316

                  with a copy to:

                  Lenard & Gonzalez LLP
                  1900 Avenue of the Stars
                  25th Floor
                  Los Angeles, California 90067
                  Attn: Allen D. Lenard, Esq.

       Licensor:  Warner Music Group Inc.
                  75 Rockefeller Plaza
                  New York, New York  10019
                  Attn: General Counsel


10.1   This Agreement shall be governed by, and construed in accordance with,
       the laws of the State of New York (without giving effect to conflicts of
       law principles thereof).

10.2   The remedies provided herein shall be cumulative and shall not preclude
       assertion by any party hereto of any other rights or the seeking of any
       other remedies against the other party

<PAGE>   8

       hereto. No failure to exercise and no delay in exercising any right,
       power or privilege granted under this Agreement shall operate as a waiver
       of such right, power or privilege. No single or partial exercise of any
       right, power or privilege granted under this Agreement shall preclude any
       other or further exercise thereof or the exercise of any other right,
       power or privilege.

10.3   Whenever possible, each provision of this Agreement shall be interpreted
       in such a manner as to be effective and valid under applicable law, but
       if any provision of this Agreement shall be prohibited by or invalid
       under applicable law, such provisions shall be ineffective to the extent
       of such prohibition or invalidity, without invalidating the remainder of
       such provision or the remaining provisions of this Agreement.

10.4   This Agreement may be modified or amended only by a writing signed by
       Licensor and Licensee.

10.5   This Agreement expresses the entire understanding of the parties and
       supersedes all prior and contemporaneous agreements and undertakings of
       the parties with respect to the subject matter hereof.

10.6   Except as otherwise provided in Section 6.3, each party will pay all of
       its own expenses, including attorneys' fees incurred in connection with
       the negotiation of this Agreement, and the performance of its obligations

10.7   Licensor and Licensee agree that all obligations of clearance, payment or
       attribution to third parties, if any, including music publishers to the
       extent necessary, union funds and performing rights societies, shall be
       solely the responsibility of Licensee, including but not limited to
       payment for use of the musical compositions embodied in sound recordings,
       if any, and for any liabilities associated with such use.

10.8   This Agreement may be executed in counterparts and by facsimile
       signature, each of which shall be deemed to be an original but which
       taken together shall constitute one agreement.

10.9   Except as otherwise expressly provided herein, this Agreement and the
       rights hereunder shall not be assignable or transferable by either party
       without the prior written consent of the other party; provided, however,
       that either party hereto may assign its rights to any parent or
       subsidiary, or any entity that acquires substantially all of the stock or
       assets of such party in which case such assignee shall assume all
       obligations and rights of such party under this Agreement.

10.10  This Agreement shall not be construed to create a partnership, joint
       venture, agency or other legal relationship between the parties, or to
       form any other legal entity.

10.11  The titles used in this Agreement are used for convenience only and are
       not to be considered in construing or interpreting this Agreement.

<PAGE>   9

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

WARNER MUSIC GROUP INC.                 ARTISTdirect, INC.

By: /s/ PAUL VIDICH                     By: /s/ MARC GEIGER
    ---------------------------             --------------------------
Title: Executive Vice President         Title: CEO

<PAGE>   10

                                                                       EXHIBIT A

                             OPERATING RESTRICTIONS

The following parameters shall apply to transmissions licensed pursuant to this

1. The Web Site Transmissions shall be streamed only and shall be streamed

2. Except as may be mutually agreed between Licensor and Licensee in writing,
the Web Site Transmissions shall comport with such parameters so that they would
be subject to statutory licensing pursuant to Paragraph 2, Subsection d, Section
114 of title 17, United States Code (the "Digital Millennium Copyright Act").

                                                                  END OF EXHIBIT

* 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.