Settlement Agreement [Amendment No. 2] - The Harry Fox Agency Inc., MPL Communications Inc., Peer International Corp. and MP3.com Inc.
SECOND AMENDMENT TO SETTLEMENT AGREEMENT
This Amendment, dated as of February 28, 2001 ("Amendment") to
the Amendment to the Settlement Agreement, dated December 28, 2000, which
amended 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, as amended, 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, as amended.
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) March 30, 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 March 23, 2001.
C. Section 5.1(a) of the Settlement Agreement is hereby amended and
restated to read as follows:
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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 March 30, 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-Principals by HFA over the previous two (2) full
calendar years (i.e., 1998 and 1999).
D. 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 March 30, 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).
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II. Controlling Document. The provisions of the Settlement Agreement, as
modified by this Amendment and the Amendment dated December 28, 2000, shall
remain in full force and effect. The parties acknowledge that the Letter
Agreement ("Letter Agreement"), dated as of December 4, 2000, as amended,
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, remains in full force
and effect in its entirety, except that all capitalized terms in the second
paragraph of the Letter Agreement shall have the meaning set forth in the
Settlement Agreement, as modified by this Amendment.
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
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Name: Robert Shaw
Title: COO
MPL COMMUNICATIONS, INC.
By: /s/ unreadable
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Name:
Title: Vice President
PEER INTERNATIONAL CORPORATION
By: /s/ RALPH PEER II
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Name: Ralph Peer
Title: Chairman
MP3.COM, INC.
By: /s/ DERRICK OIEN
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Name: Derrick Oien
Title: Chief Operating Officer
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