ARTISTdirect Inc. Contracts
Sample Business Contracts
Internet Video License Agreement - Warner Music Group Inc. and ARTISTdirect Inc.
12.10.99
INTERNET VIDEO LICENSE AGREEMENT
THIS AGREEMENT is made as of the 20th day of December, 1999 BETWEEN:
1. WARNER MUSIC GROUP INC. ("Warner") of 75 Rockefeller Plaza, New York,
New York 10019; and
2. ARTISTdirect, INC. ("ADI") of 17835 Ventura Boulevard, Suite 310,
Encino, California 91316.
BACKGROUND
A. WHEREAS, Warner, in order to promote the sale and distribution of
phonorecords and audio-visual music products throughout the "Territory"
(as hereinafter defined in subparagraph 1.01(o)), licenses the use of
"Warner Videos" (as hereinafter defined in subparagraph 1.01(q)); and
B. WHEREAS, ADI intends to "Stream" (as hereinafter defined in
subparagraph 1.01(l)) Warner Videos from "Licensed Music Sites" (as
hereinafter defined in subparagraph 1.01(e)).
C. NOW THEREFORE, the parties hereto have agreed to the terms and
conditions set forth below with respect to the non-exclusive use by ADI
of Warner Videos on Licensed Music Sites.
THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.01 Definitions
Unless defined elsewhere in this Agreement, capitalized terms shall
have the meanings ascribed to them below:
(a) "ENDUSER DEVICE": any device (such as a computer or a Web TV) which is
capable of receiving and playing/displaying the audio-visual output of
a Streamed Video.
(b) "EXCERPT": means a continuous audio-visual portion of a Warner Video
where no more than 30 seconds thereof may be accessed by the enduser or
viewed by a viewer.
(c) Intentionally deleted.
1
<PAGE> 2
(d) "INTERNET": the wide area cooperative network of university, corporate,
government and private computer networks communicating through
Transmission Control Protocol/Internet Protocol which is commonly
referred to as the Internet.
(e) "LICENSED MUSIC SITE": any Music Site which: (i) (A) is either wholly-
or partially-owned by ADI; and (B) is wholly-programmed and operated by
ADI; and (C) is prominently and exclusively branded with the tradename,
trademark or logo of ADI; or (ii) (A) is operated and managed by ADI
and (B) is subject to a comprehensive written web site agreement
between ADI and a recording artist (or such recording artist's
furnishing company) ("Artist") of the type which ADI typically enters
into with recording artists as of the date hereof; provided, that such
Artist is a recording artist then-currently signed to an exclusive
recording agreement with affiliates of Warner, which such Music Site on
a gratis basis (A) Streams Videos in a sequence designated by ADI on a
continuous 24-hour, seven-day-a-week basis (i.e., as part of a
"Pre-Programmed Stream") or (B) Streams particular Videos at the demand
of an enduser (i.e., as part of an "On-Demand Stream"). Without
limiting the foregoing, "Licensed Music Site" shall include all of
those "pages" on a Music Site: (w) that constitute "home pages"; (x)
that direct an enduser to a Video; (y) through which an enduser
navigates in order to view a Video; or (z) from which an enduser can
Stream a Video.
(f) "MASTER": a first generation color copy of the fully-edited titled and
assembled electronic master of a Warner Video (a "Videotape Copy") or,
at Warner's election, a copy of such electronic master digitized by
Warner in a format compatible with ADI's technical requirements (a
"Digitized Copy").
(g) "MUSIC SITE": a non-subscription, music audio-visual programming
service which may be advertiser-supported, which: (i) is delivered over
the Internet (which may also include delivery via broadband
technology); (ii) is transmitted from fileservers exclusively located
in the United States using Streaming technologies; (iii) uses English
as the principal language spoken by hosts or used in textual, graphic
or interstitial programming; and (iv) if such service transmitted
digital audio data only, rather than digital audio-visual data (other
than with respect to On-Demand Streams) 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").
(h) "ON-DEMAND STREAM FRACTION": a fraction, the numerator of which is that
number of transmissions to an individual enduser of Warner Videos (in
whole or in part) other than Excerpts on a particular Licensed Music
Site as part of an On-Demand Stream and the denominator of which is
that number of transmissions to an individual enduser of Videos (in
whole or in part), including Warner Videos, on such particular Licensed
Music Site as part of an On-Demand Stream, as determined in a calendar
quarter.
2
<PAGE> 3
(i) "ON-DEMAND STREAM RECEIPTS": gross advertising monies (or the monetary
value of any non-monetary advertising consideration) actually received,
directly or indirectly, by ADI or ADI's affiliates in connection with
the page of a Licensed Music Site that provides an On-Demand Stream of
one or more Warner Videos less any actual advertising agency or media
sales fees directly related thereto.
(j) "PRE-PROGRAMMED STREAM FRACTION": a fraction, the numerator of which is
that number of transmissions to an individual enduser of Warner Videos
(in whole or in part) other than Excerpts on a particular Licensed
Music Site as part of a Pre-Programmed Stream and the denominator of
which is that number of transmissions to an individual enduser of
Videos (in whole or in part), including Warner Videos, on such
particular Licensed Music Site as part of a Pre-Programmed Stream, as
determined in a calendar quarter.
(k) "PRE-PROGRAMMED STREAM RECEIPTS": gross advertising monies (or the
monetary value of any non-monetary advertising consideration) actually
received, directly or indirectly, by ADI or ADI's affiliates in
connection with the page of a Licensed Music Site that provides a
Pre-Programmed Stream of one or more Warner Videos less any actual
advertising agency or media sales fees directly related thereto.
(l) "STREAM(s)(ed)(ing)": a public performance of any duration via the
Internet that permits an enduser to view data contemporaneously with
its reception by an Enduser Device in such a manner that the data is
not copied, duplicated or stored in such Enduser Device except by way
of temporary buffering.
(m) "TERM": shall commence on the date of this Agreement and end on
December 31, 2001, unless sooner terminated as set forth herein.
(n) "TERM YEAR": each separate, consecutive 12-month period of the Term.
(o) "TERRITORY": worldwide.
(p) "VIDEO": an audio-visual work embodying the sound recording of a single
musical composition in synchronization with visual images intended
primarily for promotional use.
(q) "WARNER VIDEO": any Video with respect to which Warner has promotional
exhibition rights in the Territory (a "Controlled Video") that Warner
or any of Warner's wholly-owned US-based record company affiliates (the
"Affiliates") wish to license to unaffiliated third parties for
broadcast television exhibition or to unaffiliated third party Music
Sites for Streaming, provided that the soundtrack of such Video is a
duplicate of a sound recording owned or controlled for the Territory by
Warner. Within sixty (60) days following the date of this Agreement,
Warner shall provide ADI with a list of current Affiliates. "Warner
Videos" shall not include: (i) any Videos commercially exhibited prior
to the commencement of the Term; or (ii) any Video which is part of a
long-form audio-visual program and is not distributed or licensed by
Warner separately therefrom. Warner shall have the right to elect in
Warner's sole discretion that Controlled Videos from up to [***]*
albums released in any Term Year not become Warner Videos for the
purposes of this Agreement until 90 days following the date which is
the earlier of: (A) the date on which the Video is initially Streamed
under Warner's authority by an unaffiliated third party; or (B) the
date on which the Video is initially exhibited under Warner's authority
on television in the US.
--------
* 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.
3
<PAGE> 4
1.02 Headings
The headings used in this Agreement are for ease of reference only and
shall have no effect on the interpretation or construction of this
Agreement.
1.03 Plural/Singular/References
The plural may include the singular and the singular may include the
plural and this Agreement shall be interpreted in this regard as the
context may require. References to paragraphs and subparagraphs are to
paragraphs and subparagraphs of this Agreement, and references to any
agreement or other instrument shall be deemed to include references to
that agreement or other instrument as varied or replaced from time to
time.
2. GRANT OF RIGHTS
2.01 Duplication Rights
During the Term, subject to the terms and conditions of this Agreement,
Warner grants to ADI a non-exclusive license to digitally encode and
duplicate Warner Videos in their entirety for duplication on ADI's
fileservers for the sole purpose of producing programming containing
Warner Videos for Streaming on Licensed Music Sites.
2.02 Streaming Right
Subject to the terms and conditions of this Agreement and any
contractual restrictions imposed upon Warner in connection with Warner
Videos of which Warner has advised ADI in writing with reasonable
advance notice, during the Term Warner grants to ADI a non-exclusive
license: (a) to permit endusers to access via Streaming Warner Videos
in their entirety as part of a Pre-Programmed Stream on a Licensed
Music Site; and (b) to permit endusers to access via Streaming Warner
Videos in their entirety as part of an On-Demand Stream on a Licensed
Music Site; provided, however, that endusers shall not be able to
Stream more than one Warner Video at a time as part of a continuous
transmission (i.e., endusers shall not be able to Stream a series of
Warner Videos as part of one continuous transmission). Continuously
during the Streaming of any Warner Video as part of an On-Demand Stream
and in a space that is "above the fold," near or adjacent to, and on
the same page as such Warner Video, ADI shall, at ADI's sole cost and
expense, provide a button permitting an enduser "one-click" access to
the "home page" for the applicable Affiliates' official site of the
applicable artist (or, if the artist does not have an official site,
the "home page" for the official site of the applicable Affiliate that
is the artist's record company), provided that Warner delivers to ADI,
prior to or no later than Warner's delivery of the applicable Warner
Video, the foregoing "home
4
<PAGE> 5
page" information. If other links are provided to third-party sites for
the same artist, then the Affiliate's link shall be the first listed
and the most prominent.
2.03 Advertising and Promotion
Subject to the terms and conditions of this Agreement and any
contractual restrictions imposed upon Warner in connection with Warner
Videos of which Warner has advised ADI in writing, during the Term, ADI
may utilize Excerpts in any and all media to advertise, promote and
publicize the exhibition of Warner Videos on the Licensed Music Sites;
provided, however, that, without Warner's written consent, no more than
one Excerpt per artist may be used for such purpose.
2.04 Names and Likenesses
Subject to the terms and conditions of this Agreement and any
contractual restrictions imposed upon Warner in connection with Warner
Videos of which Warner has advised ADI in writing with reasonable
advance notice, during the Term, ADI may use the name and
Warner-approved or -supplied likenesses, such approval not to be
unreasonably withheld or delayed, of such artist for the purposes of
advertising, promoting or publicizing the Streaming by ADI of such
Warner Video on the applicable Licensed Music Site, but not in a manner
which implies an endorsement of any service (including, without
limitation, Licensed Music Sites) or product without Warner's prior
consent.
2.05 Reservation of Rights
(a) As between Warner and ADI, Warner retains all ownership rights in
Masters and Warner Videos including, without limitation, all copyrights
and trademarks in Masters and Warner Videos; provided, however, that
neither Warner nor the Affiliates shall use in any manner any Digitized
Copy of a Warner Video created by or at the direction of ADI, unless
Warner or an Affiliate has made payment therefor in accordance with
paragraph 4.01.
(b) ADI shall not have any rights in Warner Videos other than as expressly
provided in this Agreement.
2.06 Withdrawal Rights
ADI agrees that ADI's rights to Stream any Warner Video may be
terminated by Warner upon one week's prior written notice to ADI if any
of the following conditions are met:
(a) If the respective Affiliate, in the respective Affiliate's good faith
business judgment believes that such termination is necessary for
significant artist relations purposes; or
5
<PAGE> 6
(b) If the respective Affiliate's rights in the Warner Video terminate; or
(c) If the respective Affiliate is notified or otherwise becomes aware of
an apparently bona fide third-party claim that the transmission of the
Warner Video infringes rights owned by others.
3. PROHIBITIONS ON ADI
ADI shall only have the right to exploit or use Warner Videos as
specifically authorized in Paragraph 2 of this Agreement, or as
otherwise agreed to by Warner in writing in its sole discretion, and
may not exploit or use Warner Videos in any other manner. Without
limiting the foregoing, unless Warner agrees otherwise in writing,
during the Term, neither ADI nor any party acting on behalf of ADI
shall, directly or indirectly:
(a) copy or duplicate any Warner Video except as ADI may reasonably require
to exercise ADI's rights under this Agreement;
(b) Stream (or encode to permit the Streaming of) the audio portion of any
Warner Video at a transmission rate greater than [***]* or the video
portion of any Warner Video at a transmission rate greater than [***]*;
(c) Stream the soundtrack of any Warner Video separately from the visual
portion thereof;
(d) Stream the visual portion of any Warner Video separately from the
soundtrack thereof, except to the extent that ADI uses only the visual
portion of an Excerpt to exercise ADI's rights under subparagraph 2.03
above without any soundtrack whatsoever;
(e) Stream any Warner Video other than in conjunction with the sequence of
images originally synchronized with the sound recording included
thereon;
(f) Stream any Warner Video on a "pay-per-view" or "pay-per-play" basis;
(g) exhibit any advertisement or commercial of any nature during or
associated with the Streaming of any Warner Video in a manner which
reasonably implies an endorsement by the artist whose performances are
contained on such Warner Video;
(h) license or authorize a third party (whether or not affiliated with ADI)
to "deep link" to a non-Licensed Music Site for the purpose of
Streaming a Warner Video; or
--------
* 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.
6
<PAGE> 7
(i) except as expressly set forth in Paragraph 5, edit or otherwise alter
any Warner Video, including, without limitation, the deletion or
erasing of any signal now or hereafter contained therein to facilitate
the automatic identification and/or logging of Warner Videos so
Streamed and/or to restrict the reproduction of Warner Videos so
Streamed (a "Protective Signal").
Should ADI become aware that any party (whether or not acting on behalf
of ADI) is circumventing the provisions of this Paragraph 3 (a
"Circumvention Event"), ADI shall promptly notify Warner in writing
thereof and ADI shall, at ADI's sole cost and expense, use ADI's
commercially reasonable efforts to prevent such circumvention.
4. WARNER VIDEOS
4.01 Servicing of Masters
In respect of each Warner Video, Warner shall make a Master available
to ADI for collection at ADI's expense, no later than the date Warner
or an Affiliate makes the applicable Warner Video available for
delivery to other unaffiliated third parties. Should Warner provide ADI
with a Master in Videotape Copy form, ADI shall provide Warner, at
Warner's request, with a Digitized Copy of such Master provided that
Warner pays ADI's actual duplication and shipping expenses in
connection therewith.
4.02 Treatment of Warner Videos and Masters
ADI shall:
(a) maintain all Masters and all copies of Masters on ADI's premises and
safeguard the same from any loss, damage, theft, unauthorized use,
copying, storage or duplication by others;
(b) be solely responsible for any loss, theft or damage to Masters and
copies of Masters in their possession and any unauthorized use,
copying, storage or duplication by others thereof; and
(c) upon the expiration of the Term or termination of this Agreement, at
Warner's election, ADI shall either: (i) (A) to the extent that Warner
made Digitized Copies of any Masters and provided them to ADI
hereunder, return all such Masters and copies of such Masters to Warner
at ADI's expense; (B) to the extent that ADI made Digitized Copies of
any Masters hereunder, but has not provided Digitized Copies of such
Masters to Warner pursuant to subparagraph 4.01 above, return all such
Masters and copies of such Masters to Warner and Warner shall pay ADI's
actual duplication and shipping expenses; and (C) to the extent that
ADI made Digitized Copies of any Masters hereunder and has provided
Digitized Copies of such Masters to Warner pursuant to subparagraph
4.01 above, return all such Masters and copies of such Masters to
Warner at
7
<PAGE> 8
ADI's expense; or (ii) or destroy all Masters and all copies of Masters
at ADI's sole cost and expense, and provide Warner with a written
affidavit verifying such destruction.
5. ADI'S UNDERTAKINGS
During the Term, ADI shall have the obligation, at ADI's sole cost and
expense:
(a) to exhibit the following information continuously during the Streaming
of each Warner Video in a space adjacent to the Warner Video, provided
that Warner submits such information to ADI in a timely manner:
(i) the title of the musical composition on the Warner Video;
(ii) the title of the record or home video that includes the
performance of the musical composition contained in the Warner
Video;
(iii) the name of the artist performing the musical composition
contained in the Warner Video;
(iv) the name of the record company and the URL of its "home page";
and
(v) the name of the motion picture, if any, from which the Warner
Video is derived.
(b) to obtain public performance rights licenses, if necessary, covering
the performance of the musical compositions in Warner Videos; and
(c) to transmit as part of each Warner Video Streamed on Licensed Music
Sites any Protective Signal contained in the Warner Videos; provided,
however, that the transmission of such Protective Signal does not
represent a recurrent and unreasonable cost to ADI and in no way leads
to the deterioration of Streaming quality of Warner Videos.
6. WARNER'S UNDERTAKINGS
Warner shall deliver to ADI, at Warner's expense (where available and
reasonably contemporaneously with the delivery of the relevant Masters)
artwork, promotional material, biographical material and other
information in relation to Warner Videos and the relevant artists, to
be used by ADI solely for promotional purposes on Licensed Music Sites.
7. COMPENSATION
8
<PAGE> 9
7.01 Royalties
ADI shall pay to Warner royalties equal to: [***]*.
7.02 Banner Ads
ADI shall make "Banner Ads" (the "Banner Ads") available to Warner at
ADI's standard rate card cost therefor, or at such other rate as the
parties shall mutually agree.
8. ACCOUNTING AND PAYMENTS; MARKET RESEARCH
8.01 Accounting
Within 30 days following each calendar quarter of the Term, ADI shall
account for and pay to Warner any royalties payable in respect of such
quarter and shall furnish to Warner a statement setting forth:
(a) a listing of all Warner Videos Streamed on each Licensed Music Site
during such quarter;
(b) the number of Warner Videos Streamed on each Licensed Music Site as
compared to the total number of Videos Streamed on each such Licensed
Music Site during such quarter;
(c) Pre-Programmed Stream Receipts and On-Demand Stream Receipts for such
quarter and the sources thereof;
(d) the number of times that Warner Videos were Streamed on each Licensed
Music Site as compared to the total number of times that Videos were
Streamed on each such Licensed Music Site during such quarter;
(e) the number of "pageviews" of the Banner Ads during such quarter and the
number of "clickthroughs" from the Banner Ads to URLs designated by
Warner during such quarter.
ADI shall also furnish Warner with the information described in
subparagraphs 8.01(a), (b) and (d) on a weekly basis within 10 days
following the end of each week during the Term.
8.02 Audit Rights
(a) ADI shall keep complete and accurate books and records of account
relating to the Streaming of Warner Videos and Videos maintained to a
standard sufficient to enable an audit trail to be established.
--------
* 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.
9
<PAGE> 10
(b) Warner shall have the right during the Term and during the two-year
period following the termination or expiration of the Term, at Warner's
sole cost and expense, to have a certified public accountant inspect
ADI's books and records no more than once during any year. This
inspection shall take place at ADI's office, during normal business
hours on not less than 30 days' written notice. The auditor appointed
by Warner may inspect and take copies of the books and records of ADI
solely for the purpose of verifying the calculation of royalties
accruing to Warner under this Agreement and verifying ADI's compliance
with Paragraph 7.
(c) Each statement rendered under this Agreement shall be deemed final and
binding upon Warner as an account stated and shall not be subject to
any claim or objection by Warner unless Warner notifies ADI of Warner's
objection to the applicable statement, stating the basis thereof in
reasonable detail within three (3) years after the date such statement
was rendered to Warner hereunder.
8.03 Market Research
ADI and Warner shall cooperate with each other in conducting market
research, at Warner's sole cost and expense, designed to determine the
effect of the Licensed Music Sites on consumer awareness of artists
featured in Warner Videos and sales of such artist's records. ADI and
Warner shall use the results of such research for internal purposes
only. Such market research shall be subject to the approval of any
applicable artists (but only if required by written agreement between
ADI and such artist) and shall be subject to the published privacy
policy of the applicable Licensed Music Site (if any).
9. WARRANTIES AND INDEMNITY
9.01 ADI's Warranties
ADI represents and warrants that:
(a) ADI has full right and authority to enter into and to fulfill all of
ADI's obligations under this Agreement; and
(b) ADI shall comply with all licenses, laws and regulations relating to
its maintenance and transmission of Licensed Music Sites.
9.02 Warner's Warranties
(a) Warner represents and warrants that Warner has the right to enter into
and fulfill all of Warner's obligations under this Agreement; and
(b) Warner makes no representation or warranty whatsoever with respect to
the non-dramatic performing rights in the musical compositions embodied
in the Warner Videos.
10
<PAGE> 11
9.03 Indemnity
(a) ADI does hereby indemnify, save and hold harmless Warner and Warner's
subsidiaries, affiliates, licensees, assigns, officers and employees
from any and all loss and damage (including, without limitation,
reasonable fees and disbursements of counsel incurred by Warner in any
action or proceeding between ADI and Warner or between Warner and any
third party or otherwise) arising out of or connected with any claim or
act or omission by ADI which is inconsistent with any of the
representations or agreements made by ADI in this Agreement or any
breach of ADI's obligations hereunder or any unauthorized use by ADI or
any party acting on behalf of ADI of Masters or Warner Videos in
connection with the advertising, promotion or publicity of each Warner
Video or the name or likeness of any artist who rendered services in
connection with such Warner Videos. Warner shall have the right at all
times, in Warner's sole discretion and at Warner's sole cost and
expense, to retain or resume control of the conduct relative to the
defense of any claim to which the foregoing indemnity applies. The
foregoing indemnity shall be limited to claims reduced to judgment or
settled with ADI's prior written consent not to be unreasonably
withheld.
(b) Warner does hereby indemnify, save and hold harmless ADI and ADI's
subsidiaries, affiliates, licensees, assigns, officers and employees
from any and all loss and damage (including, without limitation,
reasonable fees and disbursements of counsel incurred by ADI in any
action or proceeding between ADI and Warner or between ADI and any
third party or otherwise) arising out of our connected with any claim
or act or omission by Warner which is inconsistent with any of the
representations or agreements made by Warner in this Agreement or any
breach of its obligations hereunder or any claim that any Warner Video
or the content thereof violates the rights of any third party,
including, without limitation, libel, slander, defamation, copyright,
trademark, and rights of privacy and publicity. ADI shall have the
right at all times, in ADI's sole discretion and at ADI's sole cost and
expense, to retain or resume control of the conduct relative to the
defense of any claim to which the foregoing indemnity applies. The
foregoing indemnity shall be limited to claims reduced to judgment or
settled with Warner's prior written consent not to be unreasonably
withheld.
(c) The indemnitor shall give the indemnitee prompt written notice of any
claim to which the foregoing indemnity applies, and the indemnitor
shall have the right to participate in the defense of any such claim
through counsel of the indemnitor's own choice and at the indemnitor's
cost and expense.
10. TERMINATION
10.01 Warner's Termination Rights
11
<PAGE> 12
Warner may terminate this Agreement immediately by written notice to
ADI if, at any time during the Term:
(a) ADI goes in liquidation, receivership or administration or becomes
bankrupt, makes any arrangement for the benefit of ADI's creditors or
has a receiver appointed for any of ADI's assets; provided, that if
such proceeding is involuntary, then Warner shall not have the right to
terminate the Term unless such proceeding is not dismissed within 90
days of the filing thereof;
(b) ADI breaches any material term or provision of this Agreement;
(c) the Licensed Music Sites cease, except for any instance of force
majeure, to be transmitted for a continuous period of 10 days; or
(d) if ADI does not succeed in preventing a Circumvention Event within 60
days following ADI's becoming aware thereof;
provided, in the case of any event set forth in subparagraph (b) above,
Warner shall have given ADI written notice of such event and ADI shall
have failed to cure same within 30 days after ADI's receipt of such
notice (or 10 business days if the event is ADI's failure to pay Warner
a sum certain).
10.02 ADI's Termination Rights
ADI may terminate this Agreement immediately by written notice to
Warner if: (a) at any time during the Term, Warner goes into
liquidation, receivership or administration or becomes bankrupt, makes
any arrangement for the benefit of Warner's creditors or has a receiver
appointed for any of Warner's assets; provided, that if such proceeding
is involuntary, then ADI shall not have the right to terminate the Term
unless such proceeding is not dismissed within 90 days of the filing
thereof; or (b) if Warner or an Affiliate breaches any material term or
provision of this Agreement and fails to cure such breach within 30
days after ADI's written notice to Warner of such breach.
11. PROCEDURE UPON TERMINATION
Upon the expiration or termination of this Agreement:
(a) ADI shall cease the Streaming of Warner Videos on Licensed Music Sites;
(b) ADI shall perform in accordance with the provisions of subparagraph
4.02(c); and
(c) should ADI terminate this Agreement pursuant to subparagraph 10.02
above, ADI shall have no further obligations to Warner and Warner shall
have no further obligations to ADI.
12
<PAGE> 13
12. MISCELLANEOUS
12.01 Relationship of the Parties
In performing its obligations under this Agreement, each of the parties
hereto shall be deemed an independent contractor, and nothing in this
Agreement shall in any way constitute either party, or any of such
party's officer or directors, an agent or employee of the other party
and this Agreement shall not be deemed to constitute a partnership,
joint venture or contract of employment between the parties.
12.02 Service of Notices
Any notice which either party hereto may desire to give or which is
required under the terms of this Agreement shall be given in writing by
registered or certified mail, return receipt requested, or by telefax
or by personal service (in all cases, all charges prepaid) to ADI at
the address first noted in the preamble to this Agreement, Attn: Chief
Financial Officer, or to such other address to which ADI notifies
Warner in writing, with copies to Lenard & Gonzalez, LLP, 1900 Avenue
of the Stars, 25th Floor, Los Angles, California 90067, Attn: Allen D.
Lenard, Esq., and to Warner to the address first noted in the preamble
to this Agreement, Attn: General Counsel. In the event any such notice
is given by mail, such notice shall be deemed to be given on the date
five business days following the date of such mailing. In the event any
such notice is given by personal delivery, such notice shall be deemed
to be given on the date personal delivery is made.
12.03 Confidentiality/Press Announcements
Neither ADI nor Warner nor their respective affiliates may disclose to
any third party (other than each party's employees and professional
advisors, in their capacity as such) any information regarding the
terms and conditions of this Agreement without the prior written
consent of the other party except:
(a) to the extent necessary to comply with the law or the legal process of
a court of competent jurisdiction or in administrative proceedings, in
which event the party making such disclosure must use its commercially
reasonable efforts to procure confidential treatment of such
information;
(b) as part of its normal reporting or review procedure to its parent
companies, its auditors and its attorneys, provided that ADI and Warner
inform these parties of the provisions of this subparagraph 12.03;
(c) to the extent necessary to comply with Warner's contractual obligations
to third parties;
(d) to make press announcements approved in writing by both of the parties;
and
13
<PAGE> 14
(e) to the extent such terms become public through no breach by either
party of this subparagraph 12.03.
In addition to the foregoing, ADI shall not disclose to any third party
(other than to ADI's employees, in their capacity as such): (i) the
identity of the Warner Videos Streamed on a Licensed Music Site; (ii)
the number of Warner Videos Streamed on a Licensed Music Site; or (iii)
the number of times that any Warner Video was Streamed on a Licensed
Music Site.
12.04 Assignment/Sublicense
Warner may not assign, sublicense or effectively assign or sublicense
Warner's rights or obligations under this Agreement except to an
affiliated or associated company or to a person or entity acquiring all
or substantially all of the stock or assets of Warner and subject to
the assignee assuming Warner's obligations hereunder. ADI may not
assign, sublicense or effectively assign or sublicense any of ADI's
rights or obligations under this Agreement to any party. For the
avoidance of doubt, ADI may not syndicate ADI's programming containing
Warner Videos.
12.05 No Waiver
No failure to exercise or delay in exercising any right, power or
privilege under this Agreement by either party shall operate as a
waiver of that right, power or privilege. Similarly, a single or
partial exercise of any right, power or privilege by either party shall
not preclude any other or further exercise of that right, power or
privilege.
12.06 Remedies Cumulative/Severability
The rights and remedies contained in this Agreement are cumulative and
are not exclusive of any rights and remedies provided by law, in equity
or otherwise. If any provision of this Agreement is prohibited by or
contravenes any applicable law, or is held by any court of competent
jurisdiction or any other legally constituted body having jurisdiction
to make this determination to be void, unlawful or unenforceable then
that provision shall be severed from the Agreement and rendered
ineffective, as far as possible, without modifying the remaining
provisions of this Agreement.
12.07 Entire Agreement/Amendments/Counterparts
This Agreement contains the entire agreement between the parties with
respect to its subject matter and supersedes any prior agreement or
negotiation between the parties on the subject matter of this
Agreement. There are no representations, agreements or understandings,
oral or written, between the parties relating to the subject matter of
this Agreement which are not fully
14
<PAGE> 15
expressed in this Agreement. No amendment, termination, waiver,
discharge or modification of this Agreement shall be effective unless
it is in writing and is signed by an authorized signatory of both
Warner and ADI. This Agreement may be executed in one or more
counterparts and by facsimile signature, each of which shall be deemed
an original and all of which together shall be deemed one Agreement.
12.08 Litigation
ADI shall notify Warner if ADI becomes aware of any unauthorized
dealing by any third party in any Warner Videos or in Licensed Music
Sites, and shall cooperate fully, at Warner's cost, in any dispute
relating to Warner's rights in Masters and Warner Videos as well as
Warner's rights under this Agreement. Warner, after written notice to
ADI, may, at Warner's sole cost and expense, act in the name of ADI and
Warner to protect Warner's rights under this Agreement and ADI appoints
Warner ADI's attorney-in-fact to do this; provided, however, that
Warner shall not be permitted to execute any document on behalf of ADI
without first affording ADI a reasonable opportunity to execute such
document itself. If Warner acts on ADI's behalf as permitted herein,
Warner shall keep ADI informed on a current basis of such acts and all
proceedings relating thereto.
12.09 Governing Law
This agreement has been entered into in the state of New York, and the
validity, interpretation and the laws of the state of New York shall
govern the legal effect of this Agreement. The New York courts (state
and federal), only, shall have jurisdiction of any controversies
regarding this Agreement; any action or other proceeding which involves
such a controversy shall be brought in these courts, in New York
County, and not elsewhere. Any process in any such action or proceeding
may, among other methods, be served upon ADI or Warner, as applicable,
by delivering it or mailing it, by registered or certified mail, return
receipt requested, directed to the address first above written. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.
ACCEPTED AND AGREED:
WARNER MUSIC GROUP INC. ARTISTdirect, INC.
By: /s/ PAUL VIDICH By: /s/ MARC P. GEIGER
------------------------------ ---------------------------
Name: Paul Vidich Name: Marc P. Geiger
Title: Executive Vice President Title: CEO
15