Settlement Agreement [Amendment No. 1] - The Harry Fox Agency Inc., MPL Communications Inc., Peer International Corp. and MP3.com Inc.
AMENDMENT TO SETTLEMENT AGREEMENT
This Amendment, dated December 28, 2000 ("Amendment") to the Settlement
Agreement, dated as of October 17, 2000 ("Settlement Agreement"), is made by and
between, on the one hand, The Harry Fox Agency, Inc. ("HFA"), a New York
corporation, MPL Communications, Inc. ("MPL") a New York Corporation, and Peer
International Corporation ("Peermusic"), a New Jersey corporation, and on the
other hand, MP3.com, Inc. ("MP3.com"), a Delaware corporation.
RECITALS
WHEREAS, the parties hereto (the "Parties") wish to extend the deadline
by which individual HFA publisher principals must approve the Settlement
Agreement so that the Parties can maximize the number of music publishers that
participate in the settlement and secure any corresponding licenses provided
therein; and
WHEREAS, all capitalized terms used herein but not defined shall have
the meanings given to such terms in the Settlement Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants, undertakings, and conditions set forth herein, and for
value received, the sufficiency of which is hereby acknowledged, the Parties
agree to amend the Settlement Agreement as follows:
AGREEMENT
I. Amendments
A. Section 1.5 of the Settlement Agreement is hereby amended and
restated in its entirety to read as follows:
1.5 "Effective Date" shall mean the date that is the earlier
of (i) February 28, 2001, or (ii) the date on which HFA
returns all monies due to MP3.com, if any, pursuant to
Sections 5.1 and 5.2, provided that this Settlement Agreement
has not been terminated prior to such date pursuant to
Sections 5.1(b), 5.2(b), or 9.1.
B. Section 1.11 of the Settlement Agreement is hereby amended and
restated in its entirety to read as follows:
1.11 "Response Date" shall mean February 19, 2001.
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C. Section 1.12 of the Settlement Agreement is hereby amended and
restated in its entirety to read as follows:
1.12 "Settling HFA Publisher-Principals" shall mean those HFA
Publisher-Principals, other than the Major Recording
Companies, from which HFA has received, on or before the
Settlement Date, the executed endorsement portion of the
Notice and Authorization pursuant to Section 4 authorizing HFA
to settle, on their behalf, all claims that were or could have
been asserted against MP3.com in connection with the use
and/or exploitation of their Copyrighted Works in the
My.MP3.com service prior to the Execution Date.
D. A new Section 1.15 is hereby added to the Settlement Agreement as
follows:
1.15 "Settlement Date" shall mean December 28, 2000.
E. A new Section 1.16 is hereby added to the Settlement Agreement as
follows:
1.16 "Additional Settling HFA Publisher-Principals" shall mean
those HFA Publisher-Principals, other than the Major Recording
Companies and the Settling HFA Publisher-Principals, from
which HFA has received, after the Settlement Date but on or
before the Response Date, the executed endorsement portion of
the Notice and Authorization pursuant to Section 4 authorizing
HFA to settle, on their behalf, all claims that were or could
have been asserted against MP3.com in connection with the use
and/or exploitation of their Copyrighted Works in the
My.MP3.com service prior to the Execution Date.
F. Section 2 of the Settlement Agreement is hereby amended and restated
in its entirety to read as follows:
2. Settlement and Release of Claims.
2.1 Effective upon the Settlement Date, Plaintiffs, each
on behalf of themselves and their respective Affiliates, for
good and sufficient consideration, receipt whereof is hereby
acknowledged, shall release and discharge MP3.com and its
servants, agents, directors, officers, successors, assigns,
employees, parent corporations, subsidiary corporations,
Affiliates, consultants, attorneys, representatives and
insurers (the "MP3.com-Releasees") of and from any and all
claims and demands or damages of every kind and nature at law,
in equity or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, past, present, and
future arising from or related to the Copyright Action, the
matters alleged therein or the use and/or exploitation of
Copyrighted Works in the My.MP3.com service prior to the
Execution Date. Notwithstanding
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the foregoing, the Plaintiffs do not release the
MP3.com-Releasees from any obligations that arise under this
Settlement Agreement, the Governing Agreement, any licenses
issued pursuant to the Governing Agreement, or from any claim
arising under Section 106(4) or Section 106(6) of the U.S.
Copyright Act, 17 U.S.C. Sections 106(4) or 106(6), or any
copyrights or other rights in sound recordings (as that term
is defined in Section 101 of the U.S. Copyright Act, 17 U.S.C.
Section 101). The foregoing release may not be changed orally.
Plaintiffs further agree that any Copyrighted Works owned or
controlled by them which were previously copied by MP3.com in
connection with its My.MP3.com service shall be deemed to have
been copied with each Plaintiff's respective consent.
2.2 Effective upon the Settlement Date, HFA, for and on
behalf of the Settling HFA Publisher-Principals (the
"HFA-Releasors"), for good and sufficient consideration,
receipt whereof is hereby acknowledged, releases and
discharges the MP3.com-Releasees of and from any and all
claims and demands or damages of every kind and nature at law,
in equity or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, past, present, and
future that the Settling HFA Publisher-Principals have
asserted or could assert against the MP3.com-Releasees
relating to MP3.com's use and/or exploitation of Copyrighted
Works in its My.MP3.com service prior to the Execution Date.
Notwithstanding the foregoing, the HFA-Releasors do not
release the MP3.com-Releasees from any obligations that arise
under this Settlement Agreement, the Governing Agreement, any
licenses issued pursuant to the Governing Agreement, or from
any claim arising under Section 106(4) or Section 106(6) of
the U.S. Copyright Act, 17 U.S.C. Sections 106(4) or 106(6),
or any copyrights or other rights in sound recordings (as that
term is defined in Section 101 of the U.S. Copyright Act, 17
U.S.C. Section 101). The foregoing release may not be changed
orally. Effective upon the Settlement Date, HFA, for and on
behalf of the HFA-Releasors, further agrees that any
Copyrighted Works owned or controlled by the HFA-Releasors
which were previously copied by MP3.com in connection with its
My.MP3.com service shall be deemed to have been copied with
each of the HFA-Releasor's respective consent.
2.3 Effective upon the Settlement Date, MP3.com, for good
and sufficient consideration, receipt whereof is hereby
acknowledged, hereby releases and discharges Plaintiffs and
their respective servants, agents, directors, officers,
successors, assigns, employees, parent corporations,
subsidiary corporations, Affiliates, consultants, attorneys,
representatives and insurers of and from any and all claims
and demands or damages of every kind and nature at law, in
equity or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, past, present, and
future arising from or related to the Copyright Action, the
matters alleged therein or the use and/or exploitation of
Plaintiffs' Copyrighted Works in the My.MP3.com service prior
to the Execution Date. Notwithstanding the foregoing, MP3.com
does not release the Plaintiffs from any obligations that
arise under this Settlement Agreement, the Governing
Agreement,
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or any licenses issued pursuant to the Governing Agreement.
The foregoing release may not be changed orally.
2.4 Effective upon the Settlement Date, MP3.com, for good
and sufficient consideration, receipt whereof is hereby
acknowledged, releases and discharges HFA, the Settling HFA
Publisher-Principals and their respective servants, agents,
directors, officers, successors, assigns, employees, parent
corporations, subsidiary corporations, Affiliates,
consultants, attorneys, representatives and insurers (the
"Copyright Owners-Releasees") of and from any and all claims
and demands or damages of every kind and nature at law, in
equity or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, past, present, and
future arising from or related to the Copyright Action, the
matters alleged therein or the use and/or exploitation of
Copyrighted Works in the My.MP3.com service prior to the
Execution Date. Notwithstanding the foregoing, MP3.com does
not release the Copyright Owners-Releasees from any
obligations that arise under this Settlement Agreement, the
Governing Agreement, or any licenses issued pursuant to the
Governing Agreement. The foregoing release may not be changed
orally.
2.5 Effective upon the Effective Date, HFA, for and on
behalf of any Additional Settling HFA Publisher-Principals
(the "Additional HFA Publisher-Principal Releasors"), for good
and sufficient consideration, receipt whereof is hereby
acknowledged, releases and discharges the MP3.com-Releasees of
and from any and all claims and demands or damages of every
kind and nature at law, in equity or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed,
past, present, and future that the Additional Settling HFA
Publisher-Principals have asserted or could assert against the
MP3.com-Releasees relating to MP3.com's use and/or
exploitation of Copyrighted Works in its My.MP3.com service
prior to the Execution Date. Notwithstanding the foregoing,
the Additional HFA Publisher-Principal Releasors do not
release the MP3.com-Releasees from any obligations that arise
under this Settlement Agreement, the Governing Agreement, any
licenses issued pursuant to the Governing Agreement, or from
any claim arising under Section 106(4) or Section 106(6) of
the U.S. Copyright Act, 17 U.S.C. Sections 106(4) or 106(6),
or any copyrights or other rights in sound recordings (as that
term is defined in Section 101 of the U.S. Copyright Act, 17
U.S.C. Section 101). The foregoing release may not be changed
orally. Effective upon the Effective Date, HFA, for and on
behalf of the Additional HFA Publisher-Principal Releasors,
further agrees that any Copyrighted Works owned or controlled
by the Additional HFA-Releasors which were previously copied
by MP3.com in connection with its My.MP3.com service shall be
deemed to have been copied with each of the Additional HFA
Publisher-Principal Releasor's respective consent.
2.6 Effective upon the Effective Date, MP3.com, for good
and sufficient consideration, receipt whereof is hereby
acknowledged, releases and discharges HFA, the Additional
Settling HFA Publisher-Principals and their
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respective servants, agents, directors, officers, successors,
assigns, employees, parent corporations, subsidiary
corporations, Affiliates, consultants, attorneys,
representatives and insurers (the "Additional Copyright
Owners-Releasees") of and from any and all claims and demands
or damages of every kind and nature at law, in equity or
otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed, past, present, and future arising
from or related to the Copyright Action, the matters alleged
therein or the use and/or exploitation of Copyrighted Works in
the My.MP3.com service prior to the Execution Date.
Notwithstanding the foregoing, MP3.com does not release the
Additional Copyright Owners-Releasees from any obligations
that arise under this Settlement Agreement, the Governing
Agreement, or any licenses issued pursuant to the Governing
Agreement. The foregoing release may not be changed orally.
2.7 Plaintiffs, Defendant, HFA, the Settling HFA
Publisher-Principals and the Additional Settling HFA
Publisher-Principals have been fully advised by their
respective attorneys of the contents of Section 1542 of the
Civil Code of the State of California, and agree that that
Section (and any other law of similar effect) and the benefits
thereof are hereby expressly waived. Section 1542 reads as
follows:
"Section 1542. (General Release - Claims
Extinguished.) A general release does not extend to
claims which the creditor does not know or suspect to
exist in his favor at the time of executing the
release, which if known by him must have materially
affected his settlement with the debtor."
G. Section 5.1(a) of the Settlement Agreement is hereby amended and
restated to read as follows:
5.1 Settlement Payment
(a) Fifteen million dollars ($15,000,000) of the Total
Payment (the "Settlement Payment") shall be used to settle
claims against MP3.com pursuant to Section 2 above. In the
event that HFA does not receive by the Response Date executed
endorsements of Settlement and License Notice and
Authorization forms from all of the Relevant HFA
Publisher-Principals, HFA will return to MP3.com an amount
that shall be calculated by multiplying the Settlement Payment
by the Percent Market Share, and then subtracting that figure
from the Settlement Payment. HFA shall return such amount, if
any, with accrued interest, to MP3.com by wire transfer on or
by February 28, 2001. For purposes of this Section only,
Percent Market Share shall be calculated by determining the
percentage of Total Revenues attributable to the Settling HFA
Publisher-Principals and Additional Settling HFA
Publisher-Principals combined, and Total Revenues shall be the
sum of all royalties distributed to Relevant HFA Publisher-
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Principals by HFA over the previous two (2) full calendar
years (i.e., 1998 and 1999).
H. Section 5.2(a) of the Settlement Agreement is hereby amended and
restated to read as follows:
5.2 Advance Payment.
(a) Fifteen million dollars ($15,000,000) of the Total
Payment (the "Advance Payment") shall be used as a recoupable,
nonrefundable advance to Licensing HFA Publisher-Principals
for royalties due under licenses issued pursuant to the
Governing Agreement during the term thereof. In the event that
HFA does not receive by the Response Date written
authorization to issue licenses to MP3.com for the use of
Copyrighted Works as provided in the Governing Agreement, in
the form of executed endorsements of Settlement and License
Notice and Authorization forms or License Only Notice and
Authorization forms, from all of HFA's Publisher-Principals,
excluding Universal Music Group and its Affiliates, HFA will
return to MP3.com an amount that shall be calculated by
multiplying the Advance Payment by the Percent Market Share,
and then subtracting that figure from the Advance Payment. HFA
shall return such amount, if any, with accrued interest, to
MP3.com by wire transfer on or by February 28, 2001. For
purposes of this Section only, Percent Market Share shall be
calculated by determining the percentage of Total Revenues
attributable to Licensing HFA Publisher-Principals, provided,
however, that, consistent with Section 5.2(c), should a
Licensing HFA Publisher-Principal, in accordance with the
Settlement and License Notice and Authorization or License
Only Notice and Authorization, choose to license some, but not
all, of its Copyrighted Works, that Licensing HFA
Publisher-Principal's revenues will be determined based solely
on the revenues generated by the Copyrighted Works it has
licensed. For purposes of this Section only, Total Revenues
shall be the sum of all royalties distributed to HFA
Publisher-Principals, excluding Universal Music Group and its
Affiliates, by HFA over the previous two (2) full calendar
years (i.e., 1998 and 1999).
I. Section 8.1 of the Settlement Agreement is hereby amended and
restated to read as follows:
8.1 Immediately following the Settlement Date, Plaintiffs and
Defendant shall cause their respective counsel to execute, and
file with the Court, a Stipulation of Dismissal With Prejudice
in the Copyright Action (the "Stipulation") in the form set
forth in Exhibit B, attached hereto.
II. Controlling Document. The provisions of the Settlement Agreement, as
modified by this Amendment, shall remain in full force and effect; provided that
the letter agreement ("Letter Agreement"), dated December 4, 2000, between
MP3.com and HFA, including but not limited to MP3.com's waivers of Sections
5.1(b) and 5.2(b) of the Settlement Agreement, as modified and
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amended by an additional letter agreement dated December 28, 2000, remains in
full force and effect.
III. Counterparts. This Amendment may be executed in any number of counterparts,
each of which may be executed by less than all of the Parties hereto, and all of
which together shall constitute one instrument. This Amendment may be executed
and delivered by facsimile and the Parties agree that such facsimile execution
and delivery shall have the same force and effect as delivery of an original
document with original signatures, and that each Party may use such facsimile
signatures as evidence of the execution and delivery of this Amendment by all
Parties to the same extent that an original signature could be used.
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IN WITNESS WHEREOF, the Parties have caused this Amendment to the
Settlement Agreement to be executed by their duly authorized representatives as
of the date first above written.
THE HARRY FOX AGENCY, INC.
By: /s/ Robert Shaw
-------------------------------------
Name: Robert Shaw
Title: E.V.P. - Chief Operating Officer
MPL COMMUNICATIONS, INC.
By: /s/ Thomas W. McCabe
-------------------------------------
Name: Thomas W. McCabe
Title: Executive Vice President
PEER INTERNATIONAL CORPORATION
By: /s/ Ralph Peer II
-------------------------------------
Name: Ralph Peer
Title: Chairman
MP3.COM, INC.
By: /s/ Derrick Oien
-------------------------------------
Name: Derrick Oien
Title: Vice President, Operations
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