EXHIBIT 10.2
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MUSICMUSICMUSIC INC.
FRANCHISE AGREEMENT
MUSICMUSICMUSIC INC.
FRANCHISE AGREEMENT
TABLE OF CONTENTS
1. GRANT............................................................... 3
2. TERM AND RENEWAL.................................................... 5
3. DUTIES OF FRANCHISOR................................................ 5
4. DUTIES OF FRANCHISEE................................................ 9
5. FEES, EXPENSES AND ROYALTIES, REVENUE SHARING....................... 14
6. FRANCHISOR INTELLECTUAL PROPERTY.................................... 16
7. FRANCHISEE DATABASE................................................. 20
8. CONFIDENTIAL MANUAL................................................. 23
9. CONFIDENTIAL INFORMATION............................................ 24
10. ACCOUNTING, RECORDS AND REPORTING................................... 25
11. ADVERTISING AND MARKETING........................................... 26
12. RESTRICTIONS ON AND MANNER OF EXPLOITATION; WITHDRAWAL.............. 27
13. ASSIGNMENT, TRANSFER OR CONVEYANCE.................................. 28
14. RIGHT OF FIRST REFUSAL.............................................. 29
15. TERMINATION......................................................... 29
16. BLOCKED CURRENCY.................................................... 31
17. OBLIGATIONS UPON TERMINATION........................................ 31
18. COVENANTS NOT TO COMPETE............................................ 33
19. TAXES, PERMITS, AND INDEBTEDNESS.................................... 34
20. INDEPENDENT CONTRACTOR.............................................. 35
21. INDEMNIFICATION..................................................... 35
22. MUTUAL REPRESENTATIONS AND WARRANTIES............................... 36
23. APPROVALS AND WAIVERS............................................... 36
24. NOTICES............................................................. 37
25. MODIFICATION........................................................ 39
26. ENTIRE AGREEMENT.................................................... 39
27. SEVERABILITY........................................................ 39
28. STRICKEN WORDS OR PHRASES........................................... 39
29. GOVERNING LAW....................................................... 39
30. ARBITRATION......................................................... 39
31. RIGHTS AND REMEDIES NOT INCONSISTENT OR IN EXCLUSION................ 40
32. INTERPRETATION...................................................... 40
33. CURRENCY REFERENCE.................................................. 40
34. FUTURE COOPERATION.................................................. 40
35. HEADINGS; NUMBER AND GENDER......................................... 40
36. BINDING EFFECT...................................................... 41
37. COUNTERPARTS........................................................ 41
EXHIBIT A................................................................. 43
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EXHIBIT B................................................................ 44
EXHIBIT C................................................................ 45
EXHIBIT D................................................................ 46
EXHIBIT E................................................................ 47
EXHIBIT F................................................................ 48
EXHIBIT G................................................................ 49
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MUSICMUSICMUSIC INC.
FRANCHISE AGREEMENT
THIS AGREEMENT, made and entered into this 26 day of January, 2000 (this
"Agreement") by and between musicmusicmusic, inc., a Delaware corporation
("Franchisor"), and IDARA, a company registered in Abu Dhabi in the United Arab
Emirates ("Franchisee"). (All capitalized terms used in this Agreement shall
have the meanings attributed to them herein.)
WITNESSETH:
WHEREAS, Franchisor, as the result of the expenditure of time, skill, effort,
and money has developed and is the sole and exclusive owner of a unique system
comprised of a digital music database, infrastructure and expertise to deliver
or "stream" high quality audio programs over the Internet to users worldwide
(hereinafter the "System");
WHEREAS, the distinguishing characteristics of the System, all of which may, in
accordance with the provisions hereof, be changed, improved, or further
developed by Franchisor from time to time, include, without limitation:
A. Tradenames, trademarks, service marks, and logos, including, without
limitation, "▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇," "RadioMoi," "NewMusicJukebox," the
"Web-Bar Player," "DDA," and such other tradenames, trademarks,
service marks, brand names, and logos as are now designated (and may
hereafter be designated by Franchisor in writing) as part of the
System (hereinafter collectively referred to as the "Proprietary
Marks");
B. A digital music database that contains a comprehensive and which have
been digitized into more than 210,000 music files providing for
delivery of music over the Internet in various high quality modes (the
"Franchisor Digital Music Database");
C. An interactive entertainment website known as RadioMoi ("RadioMoi
Website") that publicly performs sound recordings over the Internet
from the Franchisor Digital Music Database ("Webcasting") and
generates revenues through advertising, sponsored promotions, artist
and record industry services, and merchandise and CD sales on the
site's RadioMoi giftshop;
D. A stand-alone unit which permits customers in record stores to sample
selections from CDs via the Internet and enables the Franchisor to
generate income from the Franchisor Digital Music Database access and
cross advertising ("The Web Bar Listening Post");
E. Trade secrets and other proprietary rights and technologies of
Franchisor including source and object code used in RadioMoi, know-how
and execution rights with respect to Webcasting technology (the
"Webcasting Technology"), proprietary software to access the RadioMoi
Web Site (the "Proprietary
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Software"), proprietary technology for operation of the Web Bar
Listening Post (the "Proprietary Technology"), patent applications
(the "Patents Pending"), and related copyrights (the "Copyrights", and
together with the Webcasting Technology, the Franchisor Digital Music
Database, Proprietary Software, Proprietary Technology, Proprietary
Marks, Patents Pending and Copyrights as they currently exist are
hereinafter collectively referred to as the "Franchisor Intellectual
Property");
F. Technical standards and specifications and technical operational
procedures as prescribed in the Franchisor's technical work-in-
progress confidential manual, as may be completed and thereafter
amended from time to time (the "Technical Manual"); and
G. Advertising, marketing, and promotional programs.
WHEREAS, Franchisee owns and maintains a Web site known as "▇▇▇▇▇▇▇.▇▇▇"
("Franchisee Website") primarily designed to distribute music from a music
database (the "Franchisee Database") and other related Web based businesses and
services to a Middle Eastern and sub-continental audience;
WHEREAS, Franchisee desires to obtain the benefits of the System by being
granted an exclusive franchise and license in the territory (the "Territory")
set forth in Exhibit A attached hereto, and to provide and operate a business
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under the System using such of the Franchisor's Intellectual Property set forth
on Exhibit B, attached hereto, in accordance with the Technical Manual, as well
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as to receive training and other assistance provided by Franchisor in connection
therewith;
WHEREAS, Franchisee intends to utilize the System and operate the Franchise
Business in and as part of the Franchisee Website, such that a portion of the
Franchisee Website will be devoted to utilizing the System and operating the
Franchise Business ("Franchisee RadioMoi Web Site"), and the remaining portion
of the Franchisee Website will be devoted to providing and operating other
businesses and services of the Franchisee;
WHEREAS, Franchisor is prepared to grant Franchisee such a franchise and license
pursuant to the terms and conditions of this Agreement; and
WHEREAS, Franchisor desires to obtain the benefits of the Franchisee Database in
connection with the System and Franchisee is prepared to grant Franchisor a
license to use the Franchisee Database pursuant to the terms and conditions of
this Agreement.
NOW THEREFORE, the parties, in consideration of the undertakings and commitments
of each party to the other party set forth herein, hereby mutually agree as
follows:
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1. GRANT
1.1 Franchisor Grant
1.1.1 Franchisor hereby grants to Franchisee, pursuant to the terms and
conditions in this Agreement, and Franchisee undertakes the
obligation and accepts from Franchisor, an exclusive and, subject
to the provisions of Sections 13.1 to 13.2, nontransferable right
and franchise to operate a business utilizing the System in the
Territory (the "Franchised Business").
1.1.2 Franchisor hereby grants to Franchisee, pursuant to the terms and
conditions of this Agreement, and Franchisee hereby accepts from
Franchisor, an exclusive, and subject to the provisions of Section
13.1 and 13.2, non-transferable right and license to use the
Franchisor Intellectual Property in the Territory for the purpose
of providing and operating the Franchised Business. The Franchisee
Business shall include any and all of Franchisor's Enhancements (as
hereinafter defined) to (a) the Webcasting Technology, the
Franchisor Digital Music Database, the RadioMoi Web site, the Web
Bar Listening Post, the patents pending and (b) the Proprietary
Marks, Proprietary Software, Proprietary Technology and Copyrights
and all other Intellectual Property as they relate to the
foregoing. Franchisee shall not be entitled under any circumstances
to make any Enhancements to the Franchisor Intellectual Property
unless specifically provided otherwise herein. "Enhancements" means
any and all changes, updates, improvements or modifications made
to, or derivative works created from, any of the Franchisor
Intellectual Property. References to "Franchisor Intellectual
Property" herein shall include any and all Enhancements thereto.
1.1.3 Franchisee shall have no rights in or license to use any Franchisor
intellectual property not specifically included in the Franchisor
Intellectual Property or any enhancement thereto (the "Nonlicensed
Franchisor Intellectual Property"). Franchisee's rights or license
to use Nonlicensed Franchisor Intellectual Property shall be
subject to Franchisee and Franchisor entering into one or more
separate agreements for same. Franchisee will be provided with a
right of first refusal ("First Refusal") with respect to rights of
deployment or delivery in the Territory of any such Nonlicensed
Franchisor Intellectual Property. In the event and to the extent
that the parties do not enter into any such agreements, Franchisor
shall be free to sell, license or transfer or otherwise deal with
the Nonlicensed Franchisor Intellectual Property as Franchisor
chooses, in the Territory and elsewhere. Notwithstanding the
foregoing, Franchisee shall have one (1) right to match on
identical or better terms (the "Matching Right") the most recent
written offer (which may be in the form of a term sheet or other
preliminary memorandum) made to Franchisor with respect to a
license, transfer or other dealing regarding the Nonlicensed
Franchisor Intellectual Property in the Territory, which Matching
Right counteroffer must be made by Franchisee and received by
Franchisor within five (5) business days of Franchisee's receipt
thereof, or such Matching Right shall otherwise be forfeit. Such
right of First Refusal and the Matching Right
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shall be subject in each case to the Company's reasonable
determination that Franchisee possesses, or can reasonably acquire
in a timely manner, any and all prerequisite technical, marketing,
financing and/or other capability required with respect to such
Nonlicensed Franchisor Intellectual Property. In the event
Franchisee does not exercise its Matching Right or does not make a
counteroffer to the Franchisor which is equivalent to or better
than the proposed terms and conditions underlying the proposal for
deployment of Nonlicensed Franchisor Intellectual Property
underlying such Matching Right, Franchisee shall have no further
matching rights nor rights of review at any time regarding such
transaction involving the Nonlicensed Franchisor Intellectual
Property. Franchisor shall in no event attempt, directly or
indirectly, to introduce a new Internet business which "competes"
(as defined in Section 11.3) with the Franchised Business.
1.1.4 Notwithstanding the territorial limitations with respect to the
foregoing grant of the Franchised Business, the parties understand
and agree that, because the Internet is available globally and is
not capable of being limited to specific territories, the foregoing
territorial limitations and any and all other territorial
limitations hereunder imposed on Franchisee shall only apply to
Franchisee's delivery of System services and businesses which are
currently capable of being limited to the Territory, such as,
without limitation, sale of advertising space and the sale of Web
Bar Listening Posts. Accordingly, Franchisee shall not be in breach
of this Agreement solely by reason of offering any persons or
entities access to (or any persons or entities actually accessing)
the Franchisee RadioMoi Website from outside the Territory, nor
shall Franchisee be in breach of this Agreement for delivering
System services or businesses outside of the Territory if the same
are not capable of being limited to the Territory, such as, without
limitation, use of the RadioMoi radio station and/or the
NewMusicJukebox. Further, with respect to all System services and
businesses that are capable of being limited to a particular
territory, Franchisee shall promptly refer any requests therefor
which originate outside of the Territory to Franchisor and,
similarly, Franchisor shall (and shall cause its other franchisees
to) promptly refer any such requests received by Franchisor (or any
of its franchisees) which originate from within the Territory to
Franchisee; save and except that with respect to merchandising,
Franchisee and Franchisor shall each be entitled to fulfill the
respective orders they receive, regardless of where the order
originates or where the merchandise is to be delivered.
1.2 Franchisee Grant
1.2.1 Franchisee hereby grants to Franchisor, pursuant to the terms and
conditions of this Agreement, and Franchisor hereby accepts from
Franchisee, during the Term of this Agreement, an exclusive right
and license to use, and to license its other franchisees of the
System to use, the Franchisee Database in the System in the
locations (the "Locations") set forth in Exhibit C annexed hereto
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and made a part hereof (the "Franchisor License").
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2. TERM AND RENEWAL
2.1 Unless sooner terminated pursuant to Section 15, the term of this Agreement
shall commence on the date first set forth above and shall expire three (3)
years from such date (the "Term").
3. DUTIES OF FRANCHISOR
3.1 Franchisor, within a reasonable period following the date of this
Agreement, shall commence and complete delivery and installation at Franchisee's
principal office in Abu Dhabi such of the Franchisor Intellectual Property
necessary for Franchisee to launch, commence and fully operate the Franchised
Business. Such reasonable period contemplates the following:
(a) All third-party parts and materials necessary for the installation of
the Franchised Business ("Third Party Materials") shall be ordered by Franchisor
promptly following execution of this Agreement. It is expected that the Third
Party Materials will be received within four weeks of being ordered.
(b) Within one week following delivery to Franchisor's principal office in
Canada of all Third-Party Materials necessary for the installation of the
Franchised Business, Franchisor shall commence programming and otherwise prepare
for installation all such Third-Party Materials ("Pre-Installation
Preparations");
(c) The Pre-Installation Preparations are expected to take approximately
two weeks following commencement of such action and are in no event expected to
take longer than four weeks;
(d) Following completion of Pre-Installation Preparations and upon
confirmation of Franchisee's operational Internet connectivity installation of
at least T-1 line capacity, Franchisor shall promptly ship to Franchisee the
Third Party Materials and any other parts, items or software reasonably expected
to be required for installation and operation of the Franchised Business
(collectively with the Third Party Materials, the "Franchise Materials"). It is
expected that the Franchise Materials will take approximately one week from the
date of shipment to be delivered to Franchisee's bonded warehouse.
(e) Within two weeks following confirmed receipt by Franchisee of the
Franchise Materials at the Franchisee's principal office in Abu Dhabi,
Franchisor shall commence local installation at Franchisee's principal office in
Abu Dhabi of the Franchise Materials and other Franchisor Intellectual Property
necessary for Franchisee to launch, commence and operate the Franchised
Business, which installation is expected to take no longer than two weeks.
3.2 Franchisor shall provide Franchisee with on-line access to the current
version of the work-in-process Technical Manual, and all subsequent amendments
thereto, as more fully described in Section 8 hereof, and which is contemplated
to be continually updated and made available on-line.
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3.3 Franchisor shall provide Franchisee and Franchisee's employees, at
Franchisee's principal office in Abu Dhabi, with reasonable and prompt
assistance in launching and initial training in respect of the Franchisor
Intellectual Property and in the development, management, sales and operation of
the Franchised Business (the "Initial Training Program"). The Initial Training
Program shall consist of (i) one year of database software support, which shall
be promptly provided by fax, phone, online or in-person as reasonably determined
in the circumstances by Franchisor (the "Initial Software Support"), commencing
upon installation at the place of business of Franchisee of the Franchisor
Intellectual Property and (ii) during the two week period commencing as of even
date therewith, provision of one individual who is an expert and highly
experienced technician in the Franchised Business and provision of one
individual who is an expert and highly experienced staff trainer in the
Franchised Business, each such individuals to be available for a reasonable
number of hours per week during usual and customary business hours of
Franchisor.
3.4 Franchisor shall promptly provide Franchisee with annual software support
by phone, fax, online or in-person as reasonably determined in the circumstances
by Franchisor, which support shall include all improvements and upgrades to the
Webcasting Technology, the Franchisor Digital Music Database updates and on-line
support and all other Enhancements (the "Annual Software Support").
3.5 Franchisor shall promptly provide Franchisee with such other reasonable
on-going technical consulting services and support during the Term by phone,
fax, online or in-person as reasonably determined in the circumstances by
Franchisor, with respect to standard problem solving and repair of any
malfunction or defect in any of the Franchisor Intellectual Property licensed
hereunder.
3.6 Franchisor shall promptly provide Franchisee with such other reasonable
on-going marketing and sales consulting services and support during the Term, by
phone, fax, online or in-person, as reasonably determined in the circumstances
by Franchisor.
3.7 Franchisor shall provide a forum, in the manner and at such times as
Franchisor deems reasonably advisable, to discuss future Enhancements, marketing
efforts and sales systems for the Franchised Business.
3.8 Franchisor shall make available to Franchisee and Franchisee's employees
during each year of the Term a reasonable number of training programs,
conferences, and seminars, free of charge. All continuing training programs
shall be conducted by fax, phone, online or in-person as reasonably determined
in the circumstances by Franchisor at such locations as Franchisor may
reasonably designate.
3.9 All services to be rendered by Franchisor pursuant to Sections 3.1 to 3.8
shall be rendered by individuals who are experts and highly experienced in such
matters. Further, with respect to any such services, in the event there is a
major technical issue or problem that cannot reasonably be resolved via fax,
phone, or remote online support, Franchisor shall, within a reasonable period of
time, send to the principal site of the Franchised Business, an expert who is
highly
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knowledgeable and experienced with respect to the particular problem(s)
identified by Franchisee, which expert shall promptly examine and attempt to
resolve such problem(s).
3.10 Franchisor shall use reasonable efforts to remain competitive and to make
Enhancements to the System throughout the Term. Franchisor shall be obligated to
promptly provide Franchisee with any and all Enhancements in accordance with the
other terms and conditions of this Agreement within a reasonable time after
implementation of such Enhancements by Franchisor.
3.11 Franchisor shall continue to develop its Franchisor Digital Music Database
by adding a minimum of 1,000 sound recordings thereto each month. Franchisor
shall at all times during the Term provide Franchisee with full and complete
streaming online access to the Franchisor Digital Music Database as well as the
digital music database of its current and future franchisees, including all
updates, without any royalties or other payments due therefor by Franchisee,
except as specifically provided herein in Section 5.3. For certainty, it is
acknowledged and agreed by the parties that it is the parties' intention that
access to the Franchisor Digital Music Database and delivery of services or
businesses which require such access will be, for the most part, from
Franchisor's servers located in the United States.
3.12 Franchisor shall on a monthly basis during the Term provide Franchisee
with full and complete reports regarding the amount and type of usage of the
Franchisor Digital Music Database, including, without limitation, detailed song
play information, as well as ancillary marketing information provided by
listeners (e.g., age, gender, etc.) if such information is made available to
Franchisor and if Franchisor is permitted under relevant privacy laws to share
such information.
3.13 Franchisor shall, upon Franchisee's request for digitization of sound
recordings, within two weeks after Franchisor's receipt of such recording,
thereafter digitize or cause to be digitized all such sound recordings that
Franchisor has approved for inclusion in the Franchisee Database.
Notwithstanding the foregoing, Franchisee shall not be obligated to use
Franchisor's services to digitize recordings, provided, however, that any and
all such recordings digitized other than by Franchisor must nonetheless be made
at the quality and standard acceptable to Franchisor, which acceptance shall not
be unreasonably withheld.
3.14 Franchisor shall use reasonable efforts throughout the Term to continue to
develop its marketing and sales systems.
3.15 Franchisor shall provide Franchisee with all such software (i) as is
reasonably necessary for Franchisee to maintain accurate records of subscribers,
songs, artists, authors, record labels and publishers with respect to the
Franchised Business, as reasonably deemed necessary by Franchisor from
time-to-time, and (ii) as may be required by Franchisee for purposes of
compliance with the mandates of performing arts societies and/or any regulatory
regime specifically applicable to the use of Franchisor Intellectual Property in
any part of the Territory. Notwithstanding the foregoing, Franchisor shall not
be required to provide any software with respect to any other ordinary course of
business activities and/or other legal compliance requirements of Franchisee.
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3.16 Franchisor shall keep track of, collect and shall pay and shall be
responsible for all royalties and/or fees due to third parties such as
publishers, artists and performers in connection with Franchisee's use of the
Franchisor Digital Music Database, and shall, upon reasonable request from
time-to-time, provide Franchisee with a statement that all such royalties due
and payable have been paid by Franchisor.
3.17 Franchisor shall comply with all laws, rules and regulations in the
Territory (applicable to the Franchisor) and elsewhere so that Franchisee shall
be able to enjoy without interruption the full and proper development and
operation of the Franchised Business in the Territory, and Franchisor shall
timely obtain and maintain any and all permits, certificates, and licenses in
connection therewith, including, without limitation, any and all licenses or
other agreements to allow Franchisee to use the Franchisor Digital Music
Database and all other elements of the System, provided, however, that
Franchisor shall not be in breach of this provision if Franchisor's
non-compliance with any such laws, rules and regulations does not have a
material adverse affect on the Franchised Business.
3.18 Franchisor hereby undertakes, in accordance with the terms and conditions
set forth herein, to promptly exercise any and all reasonable efforts to provide
for fully reliable operation of the System. Notwithstanding the foregoing,
Franchisor shall not be in breach of this Agreement (but shall nevertheless
comply with the provisions of the first sentence of this Section) in the event
the System fails to perform properly as a result of any defects with respect to
third party products, services, personnel (including Franchisee personnel) or
materials over which Franchisor has no reasonable control. For purposes of the
foregoing, "fully reliable operation of the System" shall mean performance of
the System during 95% of ordinary course of business operation, consistent with
past day-to-day practice of the System as it has been used and maintained from
inception up to and including the date of this Agreement. For purposes of
clarity, any and all scheduled "downtimes" of the System for purposes of
maintenance and upgrading of the System shall not be construed as affecting the
fully reliable operation of the System, provided such "downtimes" are of a
reasonable duration and frequency and that Franchisor gives Franchisee
reasonable prior notice thereof.
3.19 Franchisor agrees to sell to Franchisor such equipment, products, programs
or services, or any components thereof, including, without limitation, software,
netware, hardware, Web services, and the Web Bar Listening Post, which
constitute or are part of the Franchisor Intellectual Property (the "Franchisor
Products") that Franchisor deems reasonably necessary for Franchisee to operate
the Franchised Business, whether for resale or for Franchisee's own use at a
price of no more than the cost of such Franchisor Products plus 10%, excluding
shipping, handling, customs and similar third party fees (the "Preference
Pricing"). In addition, in the event that Franchisor shall sell any of the
Franchisor Products to any other franchisee during the Term of this Agreement at
a price lower than the Preference Pricing, the Preference Pricing shall be
adjusted so that with respect to such of the Franchisor Products thereof as are
sold at such lower price, Franchisee shall pay no more than such lower rate for
such Franchisor Products (the "Most Favored Nations Pricing"). Notwithstanding
the foregoing, at such time as the pricing for any Franchisor Products with
respect to any other Franchisor franchisee is subsequently revised, rescinded or
otherwise no longer in effect, the price of such Franchisor Products as
previously
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reduced in cost as per Most Favored Nations Pricing shall revert to the
Preference Pricing. The foregoing shall in no event require Franchisor to pay
any refund to Franchisee with respect to any Franchisor Products which are sold
and delivered to any other Franchisor franchisee after the sale and delivery of
any such Franchisor Products to Franchisee. Franchisor undertakes to use
reasonable efforts to obtain the best price on Franchisor Products and shall use
its best efforts to negotiate reasonable and customary representations,
warranties and where possible, options for extended service contracts, on
Franchisor Products for the benefit of Franchisee, and shall, upon request,
provide Franchisee with a copy of any such contract of purchase.
3.20 (a) If any defect occurs which causes any Material Interruption (as
defined below) in the deployment or operation of the System by Franchisee, and
such Material Interruption is not in any month attributable to any third party
products, services, personnel (including Franchisee personnel) or materials
outside of Franchisor's reasonable control, Franchisor shall refund and/or
credit to Franchisee such pro-rata fees and royalties as are due or have been
paid to Franchisor with respect to such month, which pro rata calculation shall
be (i) the fees and royalties due for such month multiplied by (ii) a fraction,
the numerator of which shall be the duration of the Material Interruption in
such month, over a denominator which shall be the total time for such month
during which the System was expected to be operable (such obligation, the
"Downtime Refund"). Franchisee undertakes to promptly notify Franchisor of any
incident which is or could with the passage of time constitute a Material
Interruption ("Downtime Incident" and the notice thereof, "Defect Notice").
Franchisor undertakes to use reasonable efforts to promptly cure any such
Downtime Incident, which it shall do at its sole cost and expense. The
determination of whether a Material Interruption has occurred in any given month
shall be made from the date and time a Defect Notice is received by Franchisor,
provided that if a Material Interruption continues from one month to another, it
shall not be necessary for Franchisee to provide Franchisor with another Defect
Notice for the second or any subsequent months over which the Material
Interruption continues. For purposes of the determination whether a Material
Interruption has occurred, personnel affiliated with Franchisee shall not be
deemed to be under the control of Franchisor, and any products, services, and/or
materials belonging to Franchisee shall not be deemed to be under the control of
Franchisor except where Franchisor has been expressly granted control thereof in
writing by Franchisee.
(b) For purposes of this Agreement, "Material Interruption" shall mean a
material inability of the System to perform less than 95% of the time during any
monthly period in which the System is expected to operate in the ordinary course
of business consistent with past day-to-day practice as the System has been used
and maintained from inception up to and including the date of this Agreement,
Franchisor hereby acknowledging that the System has from its inception up to the
date of this Agreement been operating without material interruption or material
defect of any kind. For purposes of clarity, any and all scheduled "downtimes"
of the System for purposes of maintenance and upgrading of the System shall not
be construed as Material Interruption of the System, provided such "downtimes"
are of a reasonable duration and frequency and that Franchisor gives Franchisee
reasonable prior notice thereof.
4. DUTIES OF FRANCHISEE
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4.1 Franchisee acknowledges that every detail of the System is important to
Franchisor in order to develop and maintain the standards and public image of
the System. Franchisee agrees to conduct the Franchised Business in strict
compliance with this Agreement.
4.2 Franchisee shall devote a reasonable number of Web pages of the Franchisee
Website to RadioMoi (the "Franchisee RadioMoi Web Site") which shall not be less
than the number of Franchisor's of RadioMoi Web pages at the date hereof. The
design, position, size, prominence and other details of such pages shall, except
as otherwise agreed by Franchisor, be substantially the same as Franchisor's
RadioMoi pages at the date hereof as set forth on Exhibit D annexed hereto and
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made a part hereof, except for Arabic translations, elements, font selections
and culturally acceptable adaptations, logos, and design changes therewith
("Arabic Customization"). The Arabic Customization shall be subject to prior
approval by Franchisor, which approval shall not unreasonably be withheld.
Franchisee shall provide and be responsible for all reasonable costs associated
with Arabic Customization.
4.3 (a) Franchisee, whether directly or indirectly, during the Term, shall
conduct and transact any and all Internet types of primarily music-related
activity or business whatsoever, whether branded or not, through and only
through the Franchisee RadioMoi Web Site. Primarily music-related activity or
business for the purposes of this Agreement shall mean, (i) the streaming of
live or recorded music, recitations of narratives, poetry and/or any other aural
form of music on the Internet, (ii) so called "music videos" or other motion
pictures that primarily feature the musical performances of an artist or group,
(such as an Internet concert Webcast); (iii) other like-types of primarily
music-related products or services over the Internet; (iv) pointers or links or
deemed links to or from any other Web page or Internet Site offering access,
sale or delivery of any of the foregoing items set forth in clauses (i) or (ii)
above (except for any Internet site of Franchisor or other franchisees of
Franchisor as authorized in writing by Franchisor); or (v) the marketing or
merchandising of any of the foregoing items set forth in clauses (i) or (ii). It
being understood and agreed to by Franchisee that Franchisor shall be entitled
to collect Royalties (as defined below) pursuant to Section 5 on any and all
income generated by Franchisee during the Term through the Franchisee Website
from any Internet type of primarily music related business or activity on the
Internet. Notwithstanding the foregoing, nothing shall prevent the sale of CDs
(or any other similar recorded media configuration now known or hereafter
developed) or any household items or products (including, without limitation,
stereos, VCRs computers (including hardware and software), cameras, DVDs radios,
television, monitors) by Franchisee and any revenues derived by Franchisee
therewith shall not be within the scope of this Agreement. In the event
Franchisee intends to purchase non-Arabic CDs for resale, Franchisee agrees to
first negotiate in good faith with Franchisor with respect to the terms of
supply, and delivery to Franchisee of such CDs. Similarly, in the event
Franchisor intends to purchase Arabic CDs (or any other record configuration now
known or hereafter developed) for resale, Franchisor agrees to first negotiate
with Franchisee with respect to the terms of supply, and delivery to Franchisor
of such CDs. For purposes of clarity, such negotiation shall not as of the date
of this Agreement constitute a binding contract with respect to the supply of
any such CDs unless and until one or more separate agreements are reached
between Franchisee and Franchisor.
10
(b) For purposes of this Agreement, "directly or indirectly" shall mean,
in the case of Franchisee, any action by the Franchisee or any of its
subsidiaries or affiliates, or any of its or their shareholders ("Franchisee
Entities"), and in the case of Franchisor, any action by the Franchisor or any
of its subsidiaries or affiliates; provided, however, that nothing contained in
this Section shall be deemed to prohibit the Franchise Entity from acquiring or
holding, solely for investment, publicly traded securities of any corporation
some or all of which activities are primarily music related products or services
on the Internet so long as such securities do not, in the aggregate, constitute
more than ten percent (10%) of any class or series of outstanding securities of
such corporation.
(c) For purposes of this Agreement, the Internet and all references
thereto shall include the Internet as currently in use and as hereafter enhanced
or further developed (the "Internet"), virtual private networks ("VPNs"
including, but not limited to, satellite delivery systems), and any and all
successor technologies to the Internet and VPNs.
4.4 Franchisee, directly or indirectly, shall not use any of the Franchisor
Intellectual Property licensed hereunder or any part thereof as premiums, in
combination sales, as give-aways, as charitable contributions or dispose of same
under similar methods of merchandising or other transfer without the prior
written consent of Franchisor not to be unreasonably withheld or unduly delayed.
4.5 Franchisee shall, commencing on the date hereof, develop the Franchisee
Database with a minimum of 850 regional (Arabic and/or other music related to
the Territory) and 150 other digitized sound recordings (which may be in any
language) each month during the Term, all of which recordings must be approved
by Franchisor not to be unreasonably withheld or unduly delayed provided that
any such non-arabic recordings have not been digitized or scheduled to be
digitized by Franchisor at or prior to such request, it being agreed to and
understood that Franchisor at all times shall have absolute approval rights as
aforesaid over the content of the Franchisee Database, subject to culturally
acceptable adaptations provided for in Section 4.2 above. Franchisee shall at
all times provide Franchisor and all current and future franchisees of
Franchisor with full and complete online and other access to and availability of
the Franchisee Database, including all updates, without any royalties or other
payments due therefor.
4.6 Franchisee shall at all times during the Term provide Franchisor with full
and complete online access to and availability of all data associated with the
operation of the Franchised Business.
4.7 Franchisee shall keep track of, collect and shall pay and be responsible
for all royalties due to third parties such as publishers, artists and
performers in connection with Franchisor's or other franchisees' use of the
Franchisee Database, and shall provide Franchisor with a monthly report thereof
by the 28th day of each month for the preceding calendar month of all such
royalties paid.
4.8 Franchisee shall staff the Franchised Business with reasonably competent
technical, sales and marketing personnel pursuant to Franchisor's suggested
level of staffing.
11
4.9 Franchisee shall use its reasonable efforts to provide state-of-the-art
hardware, netware and Webware to ensure proper operation of the Franchised
Business.
4.10 Franchisee agrees to purchase from Franchisor any and all Franchisor
Products as contemplated in Section 3.19. Franchisor represents that prior to
the date hereof, Franchisor has provided Franchisee with a complete list of the
Franchisor Products (as well as the purchase price thereof) required by
Franchisee to operate the Franchised Business, and Franchisee acknowledges
receipt of such list. Franchisee shall not be obligated to purchase any
additional Franchisor Products from Franchisor except as specifically
contemplated in Section 8.1. The purchase price for the Franchisor Products
shall be due and payable within 30 days of invoicing.
4.11 Subject to Section 8.2, Franchisee shall conduct the technical operation
of the Franchised Business in conformity with the technical standards, policies,
methods, and techniques as Franchisor acting reasonably may, from time to time,
prescribe in the Technical Manual. Franchisee shall refrain from deviating from
the Technical Manual, or otherwise operating the Franchised Business except in
strict compliance with this Agreement.
4.12 Franchisee shall comply with all laws, rules and regulations in the
Territory, and shall timely obtain any and all permits, certificates, and
licenses necessary for the Territory for the full and proper development and
operation of the Franchised Business in the Territory; provided, however, that
Franchisee shall not be in breach of this provision if Franchisee's
noncompliance with any such laws, rules and regulations does not have a material
adverse affect on the Franchised Business.
4.13 Franchisee shall comply with all of Franchisor's requirements existing at
the date hereof and of which Franchisee has been notified concerning the types
of services and products that may be delivered, promoted or advertised by the
Franchised Business.
4.14 Franchisee shall pay all Fees, Expenses and Royalties (as such terms are
defined below) pursuant to Section 5 and shall comply with all other
requirements set forth in this Agreement.
4.15 If any defect occurs which causes any Material Interruption in the
deployment of such portions of the Franchisee Database to be made available to
Franchisor in any month, and such Material Interruption is not attributable to
any third party products, services, personnel (including Franchisor personnel)
or materials outside of Franchisee's reasonable control, Franchisee shall refund
and/or credit to Franchisor such pro-rata royalties as are due or have been paid
to Franchisee with respect to such month in accordance with the calculation of a
Downtime Refund as applied to Franchisor pursuant to Section 3.20. Franchisor
undertakes to promptly notify Franchisee of any Downtime Incident. Franchisee
undertakes to use reasonable efforts to promptly cure any such Downtime
Incident, which it shall do at its sole cost and expense. The determination of
whether a Material Interruption has occurred in any given month shall be made
from the date and time a Defect Notice is received by Franchisee. For purposes
of the determination whether a Material Interruption has occurred, personnel
affiliated with Franchisor shall not be deemed to be under the control of
Franchisee, and any products, services, and/or materials belonging to Franchisor
shall not be deemed to be under the control of Franchisee except where
Franchisee has been expressly granted control thereof in writing by Franchisor.
12
For purposes of clarity, Franchisee shall, in addition to the foregoing, be
responsible for any and all costs and expenses related to reliable operation and
maintenance of the System, the Franchised Business and the Franchisee Database
within the Territory which are not expressly assumed by Franchisor elsewhere in
this Agreement.
13
5. FEES, EXPENSES AND ROYALTIES, REVENUE SHARING
5.1 In consideration for this Agreement, the services provided hereunder and
the franchise and license granted herein, Franchisee shall pay to Franchisor
such fees (the "Fees") and expenses (the "Expenses") set forth in Exhibit E
---------
annexed hereto and made a part hereof.
5.2 Fees shall be paid at such times as are set forth in Exhibit E and all
---------
Expenses shall be paid within 30 days of invoicing.
5.3 Franchisee shall also pay to Franchisor on-going royalties (the
"Royalties") during the Term as set forth in Exhibit F annexed hereto and made a
---------
part hereof.
5.4 Franchisor shall pay to Franchisee Royalties in connection with the
Franchisor License during the Term as set forth in Exhibit F.
---------
5.5 All Royalties shall be paid within 60 days after the end of each month with
respect to Gross Income or Gross Advertising Income (as such terms are
hereinafter defined), as the case may be, recorded in that month. "Gross Income"
shall mean all revenues, excluding advertising revenues, earned from licensed
activities hereunder without any deductions whatsoever. "Gross Advertising
Income" shall mean all advertising revenues earned from licensed activities
hereunder without any deductions whatsoever.
5.6 Except as otherwise specified in writing from time-to-time, all Fees,
Expenses, Royalties and any other payments (collectively, "Payment Obligations")
due to Franchisor hereunder shall be payable in United States currency and, with
respect to payments to Franchisee, in the currency as specified from
time-to-time by Franchisee, in each case by wire transfer of funds pursuant to
written instructions provided by each party to the other party. Any overdue
Payment Obligations which are late by more than a 60 day grace period following
the due date ("Grace Period") shall bear interest at the rate of 1.9% per month
(based on a 360 day year) or the maximum rate permitted under applicable laws,
whichever is less. Should any Franchisee or Franchisor Payment Obligation be
late more than twice during the Term of this Agreement by more than 10 days from
its respective due date, the right of Grace Period hereunder shall terminate
immediately and interest shall accrue on any unpaid Payment Obligations as of
the respective due date at the foregoing rate.
5.7 With respect to each of Franchisor and Franchisee, except as otherwise set
forth herein, there shall be no deduction from Royalties for uncollectable
accounts, or for taxes, fees, assessments or other expenses of any kind which
may be incurred in connection with: (i) royalty payments; (ii) manufacturing,
sales, distribution or advertising; or (iii) the transfer of funds or royalties
or the conversion of any currency. It shall be the sole responsibility and at
the sole expense of the Franchisee to obtain the approval of any authorities
with respect to its operation of the System within the Territory; to take
whatever steps may be required to effect the payment of funds from abroad; to
minimize or eliminate the incidence of foreign taxes, fees or assessments which
may be imposed; to commence or continue doing business in any foreign territory;
and to comply in any and all material respects with all applicable laws and
regulations. It shall be the sole responsibility and at the sole expense of the
Franchisor to obtain the approval
14
of any relevant authorities outside of the Territory with respect to its
operation of the System; to take whatever steps may be required to effect the
payment of funds from abroad; to minimize or eliminate the incidence of foreign
taxes, fees or assessments which may be imposed; to commence or continue doing
business in any foreign territory; and to comply in any and all material
respects with all applicable laws and regulations.
5.8 Each party shall furnish the other party, at the same time it makes
payment of Royalties, with a full and complete statement, duly certified by an
officer to be true and accurate, showing all Gross Income and/or Gross
Advertising Income, as the case may be, received during the month in question,
the amount of royalties due with respect to such income, and a breakdown by
category and country of where such income was earned, together with such other
pertinent information as either party may reasonably be requested from time to
time. All figures and monetary amounts shall first be stated in the currency in
which the sales were actually made. If several currencies are involved in any
reporting category, that category shall be broken down by each such currency.
Next to each currency amount shall be set forth the equivalent amount stated in
United States Dollars, and the rate of exchange used in making the required
conversion calculation. The rate of exchange shall be the actual rate of
exchange obtained on the date of payment. Each of the parties shall use
reasonable efforts to collect their respective accounts receivable which are
included within the subject matter of this Agreement.
5.9 Franchisor agrees that all advertising revenues generated directly or
indirectly by Franchisor or Franchisor's franchisees (including Franchisee)
shall be allocated and distributed in accordance with Exhibit F.
5.10 (a) Franchisee acknowledges that the bandwidth requirements with respect
to digital deliveries into the Territory are substantial and therefore
Franchisee agrees to defray such of Franchisor's bandwidth costs in an amount
proportionate to the percentage which the aggregate material from the Franchisor
Digital Music Database and databases of other Franchisor franchisees that are
delivered into the Territory each calendar month represent as a portion of
Franchisor's total bandwidth costs for each such month, which defrayment amounts
shall offset and be deducted from Royalties due from Franchisor to Franchisee
upon presentation of usage information, relevant bandwidth invoices and
specification of the foregoing allocation of costs thereof, and (b) Franchisor
acknowledges that the bandwidth requirements with respect to digital deliveries
from the Territory are substantial and therefore Franchisor agrees to defray
such of Franchisee's bandwidth costs in an amount proportionate to the
percentage which the aggregate material from Franchisee's Digital Music Database
delivered from the Territory to Franchisor and other franchisees each calendar
month represents as a portion of Franchisee's total bandwidth costs for each
such month, which defrayment amounts shall offset and be deducted from Royalties
due from Franchisee to Franchisor upon presentation of usage information,
relevant bandwidth invoices and specification of the foregoing allocation of
costs thereof.
5.11 Franchisor acknowledges that Franchisee is engaged in other businesses,
including, but not limited to other businesses conducted on the Internet and
that, in particular, the Franchisee RadioMoi Web Site shall only constitute a
portion of Franchisee's Website. Revenues of Franchisee which are not derived in
connection with Franchisee RadioMoi Web Site and/or
15
which are derived outside of the scope of the Franchised Business shall not be
subject to the terms of this Agreement.
6. FRANCHISOR INTELLECTUAL PROPERTY
6.1 Franchisor represents with respect to the Franchisor Intellectual Property
that:
6.1.1 Franchisor is the exclusive owner throughout the world of all
right, title and interest in and to the Franchisor Intellectual
Property, except any portions thereof for which it may be a duly
authorized user and/or licensee of a third party ("Licensed
Portions"). With respect to the Licensed Portions, Franchisor is
and shall be throughout the Term duly licensed to use, and to
permit Franchisee to use, the Licensed Portions, without any
limitations or conditions, save and except for any such
limitations or conditions provided in this Agreement. Franchisor
has the right to grant all rights and benefits being granted to
Franchisee hereunder. Franchisee's use of the System and/or any
element thereof as contemplated herein will not violate the rights
of any nature or kind of any third party, including, without
limitation, any copyright, trademark or other intellectual
property rights of any nature or kind.
6.1.2 Franchisor shall take all steps reasonably necessary to preserve
and protect the ownership and validity in and to the Franchisor
Intellectual Property.
6.1.3 Except as otherwise provided herein, the Franchisor Intellectual
Property is as of the date hereof free and clear of any and all
Encumbrances whatsoever. For purposes of the foregoing,
"Encumbrances" means mortgages, charges, pledges, security
interest, liens, encumbrances, actions, claims, demands and
equities of any nature whatsoever or howsoever arising and any
rights or privileges capable of becoming and is the foregoing.
During the Term of this Agreement, Franchisor undertakes that the
Franchisor Digital Music Database shall not become subject to
Encumbrances except with respect to loans which may be made to
Franchisor through recognized international institutional lenders
and/or such Encumbrances which may granted by Franchisor as
security in an offering of Franchisor's public indebtedness.
6.1.4 To the best knowledge of Franchisor after reasonable
investigation, none of the software included as part of the
Franchisor Intellectual Property contains any known virus, Trojan
horse, worm, software lock, drop dead device or any other limiting
routine that would intentionally erase data or render such
software to become incapable of being used.
6.1.5 All software included as part of the Franchisor Intellectual
Property (i) shall be able to accurately process date data
including, without limitation, calculating, comparing and
sequencing from, into and between the 20th and 21st centuries,
including leap year calculations; and (ii) is fully capable of
operating as required to accommodate the year 2,000 and beyond.
16
6.2 With respect to the Franchised Business, Franchisee agrees that:
6.2.1 [Intentionally omitted].
6.2.2 Franchisee shall not make any Enhancements to the Franchisor
Intellectual Property.
6.2.3 Subject to Section 1.14, Franchisee shall use the Franchisor
Intellectual Property only in connection with the operation of the
Franchised Business in the Territory.
6.2.4 During the Term of this Agreement, Franchisee shall, where
reasonably possible, identify Franchisor as the owner of the
Franchisor Intellectual Property, including, but not limited to,
on invoices, order forms, receipts and contracts related to the
System, and at such conspicuous location on Franchisee's RadioMoi
Web Site pages allocated to RadioMoi, all products and hardware
related to the System and locations of the Franchised Business'
premises as are related to the System, as Franchisor shall
reasonably request. Such identification shall be in the form which
specifies Franchisor's name, followed by such other identification
as shall be approved by Franchisor.
6.2.5 Franchisee's right to use the Franchisor Intellectual Property is
limited to such uses as are authorized under this Agreement, and
any material unauthorized use thereof shall constitute an
infringement of Franchisor's rights.
6.2.6 Franchisee shall not use the Franchisor Intellectual Property to
incur any obligation or indebtedness on behalf of Franchisor.
6.2.7 Franchisee shall not use some or all of the Franchisor
Intellectual Property as part of its corporate or other legal
name, without the prior written consent of Franchisor.
6.2.8 Franchisee shall promptly comply with Franchisor's reasonable
requests and instructions for filing and maintaining any requisite
trade name or fictitious name registrations, and shall execute any
reasonable documents or instruments reasonably deemed necessary by
Franchisor to obtain protection for the Franchisor Intellectual
Property or to maintain their continued validity and
enforceability of any and all direct or indirect rights thereof,
provided, however, that any and all fees, costs and expenses
incurred by Franchisee on behalf of Franchisor with respect to the
foregoing shall be at the sole cost and expense of Franchisor.
6.2.9 Franchisee shall include correct trademark, trade name, copyright,
trade secrets and patent notices for the Franchisor Intellectual
Property on all System related materials and equipment where
appropriate, and shall not remove, alter, cover, obfuscate or
otherwise deface any trademark, trade name, patent, trade secret
or
17
copyright notice on any promotion or advertising material used,
directly or indirectly, in conjunction with or for Franchisor
Intellectual Property.
6.2.10 Franchisee shall not market or deliver access to the Franchisee
Database from a particular jurisdiction of the Territory unless
and until all regulatory approvals, licenses and permits required
by the applicable performing arts societies ("Rights Society") of
such jurisdiction or any court of competent jurisdiction,
governmental body or regulatory agency (a "Regulatory Body") have
been obtained, and, Franchisee, at its sole cost and expense,
shall prepare and submit any and all appropriate applications,
data and other information required by such Rights Society or
Regulatory Body in such jurisdiction and have obtained all
requisite approvals, licenses and permits for authorized and
compliant operation of the Franchisee Database in such
jurisdictions. Notwithstanding the foregoing, Franchisor
undertakes to provide reasonable assistance, by means of letter,
telephone, fax, e-mail or similar communication, on behalf of
Franchisee with respect to facilitating the acquisition of any
requisite regulatory approvals, licenses and/or permits required
by such Rights Societies, including (a) performing rights, (b)
master rights, (c) artist rights, (d) ephemeral rights and (e)
mechanical rights.
6.2.11 Franchisee, at its sole cost and expense, shall be responsible and
shall promptly pay, any and all royalties and other fees,
assessments, taxes or charges imposed by any Regulatory Body or
Rights Society with jurisdiction for the Territory with respect to
operation of the Franchised Business in each jurisdiction within
the Territory and undertakes to assure on-going legal compliance
with the requirements of applicable copyright law within the
Territory, any Rights Society and each Regulatory Body with
relevant jurisdiction thereof, including, but not limited to, the
timely filing of any reports required by any such applicable rule,
law or entity. At the request of Franchisor, Franchisee shall
promptly provide copies of documentation evidencing compliance
with the foregoing requirements and copies of any and all such
filings.
6.3 Franchisee expressly understands and acknowledges that:
6.3.1 As between the parties hereto, Franchisor is the owner of all
right, title, and interest in and to the Franchisor Intellectual
Property and the goodwill associated with and/or embodied or
symbolized by them.
6.3.2 The Proprietary Marks are valid and serve to identify the System
and those who are franchised to use the System.
6.3.3 Franchisee shall not directly or indirectly contest the validity
or the ownership of the Franchisor Intellectual Property.
6.3.4 Franchisee's use of the Franchisor Intellectual Property pursuant
to this Agreement does not give Franchisee any ownership interest
or other interest in or
18
to the Franchisor Intellectual Property, except the franchise and
license granted herein.
6.3.5 Any and all goodwill arising from Franchisee's use of the
Franchisor Intellectual Property in the Franchised Business shall
inure solely and exclusively to the benefit of Franchisor, and
upon termination of this Agreement and the franchise and license
herein granted, no monetary amount shall be assigned as
attributable to any goodwill associated with Franchisee's use of
the Franchisor Intellectual Property.
6.3.6 The right and license of the Franchisor Intellectual Property
granted hereunder to Franchisee is exclusive only in the
Territory, and Franchisor thus may:
6.3.6.1 Itself use, and grant franchises to others to use, the
Franchisor Intellectual Property outside of the
Territory.
6.3.6.2 Subject to Sections 1.1.2, 1.1.3 and 18 establish,
develop, and franchise other systems, different from the
System franchised herein, without offering or providing
Franchisee any rights in, to, or under such other
systems.
6.3.6.3 Itself use, and grant franchises to others to use, the
Franchisee Database outside of the Territory during the
Term.
6.4 Franchisee shall, upon learning thereof, promptly notify Franchisor of any
unauthorized use of the Franchisor Intellectual Property, any challenge to the
validity of the Franchisor Intellectual Property, or any challenge to
Franchisor's ownership of, or Franchisee's right to use, the Franchisor
Intellectual Property. Franchisee acknowledges that Franchisor has the sole
right to direct and control any administrative proceeding or litigation
involving the Franchisor Intellectual Property, including any settlement
thereof. Franchisor has the obligation, to take action against uses by others
that may reasonably constitute material infringement of the Franchisor
Intellectual Property.
6.5 Provided Franchisee is not in material breach of this Agreement, Franchisor
will defend, at Franchisor's expense, against any third party claim, suit, or
demand involving the Franchisor Intellectual Property licensed hereunder and
arising out of Franchisee's use thereof, provided, that Franchisor is promptly
notified in writing and is given complete authority and information required for
defending or settling any such claim, suit or demand and, further provided, that
Franchisee is not in material breach of this Agreement. If, within a reasonable
time Franchisor does not assume active control of such third party claim, suit,
or demand (each, an "Action"), Franchisee may assume authority over such Action,
and upon written notice to Franchisor of the assumption of such authority,
Franchisor shall therewith be responsible to pay for any and all reasonable
legal or other expenses incurred by Franchisee in connection with the defense of
the Action. Franchisor shall not, without the prior written consent of
Franchisee, settle or compromise or consent to the entry of any judgment in any
pending or threatened Action, suit or proceeding in respect of which
indemnification may be sought hereunder unless such settlement,
19
compromise or consent includes an unconditional release of Franchisee from any
and all liability arising out of such Action.
6.6 In the event of any litigation or administrative proceeding relating to the
Franchisor Intellectual Property, Franchisee shall execute any and all
reasonable documents and do all reasonable acts as may, in the reasonable
opinion of Franchisor, be necessary to carry out such defense or prosecution,
including, but not limited to, becoming a nominal party to any legal action.
Except to the extent that such litigation is the result of Franchisee's use of
the Franchisor Intellectual Property in a manner inconsistent with the terms of
this Agreement, Franchisor agrees to reimburse Franchisee for its out of pocket
costs in performing such acts. Notwithstanding the foregoing, Franchisor shall
not pay for ordinary course of business expenses of Franchisee during any such
defense or prosecution, including, but not limited to, the salary costs of
Franchisee employees.
6.7 The provisions of Section 6.5 and 6.6 (collectively, the "Franchisor Action
Provisions") shall survive termination of this Agreement for a period of two
years (the "Franchisor Action Extension Period"), it being understood that if
notice of any Action under the Franchisor Action Coverage Provisions is made
within the Franchisor Action Extension Period, such Franchisor Action Coverage
Provision shall survive until such Action is definitively settled or a court of
competent jurisdiction shall have finally determined that such Action shall not
exist to the extent claimed by the other party.
6.8 To ensure that Franchisee will have access to such of the Franchisor
Intellectual Property as may be necessary to permit it to use the System as
contemplated by this Agreement, Franchisor agrees to provide to an escrow agent,
the identity of which is satisfactory to Franchisor and Franchisee, a copy of
all source code and object code used in, or in connection with the System,
concurrently with the deployment or delivery of the System by Franchisee to
Franchisee. Said escrow agent will hold such code in escrow, and release it if
and only if it is permitted to do so pursuant to the terms and conditions of the
Escrow Agreement appended hereto as Exhibit G. The parties shall execute an
Escrow Agreement substantially in the form of Exhibit G concurrently with the
execution of this Agreement. If Franchisee is entitled to receive any source
code or object code pursuant to said Escrow Agreement, (i) Franchisor will be
deemed to automatically have granted to Franchisee a non-exclusive and
irrevocable license during the remainder of the Term and throughout the
Territory to use such elements of the System (and all required underlying
Franchisor Technology) as are necessary solely to obtain the same level of
operability, delivery and deployment of the Franchised Business as contemplated
by this Agreement.
7. FRANCHISEE DATABASE
7.1 Franchisor represents with respect to the Franchisee Database that:
7.1.1 Franchisee is the exclusive owner throughout the world of all
right, title, and interest in and to the Franchisee Database.
20
7.1.2 Franchisee shall take all steps reasonably necessary to preserve
and protect the ownership and validity in and to the Franchisee
Database.
7.2 Franchisor expressly understands and acknowledges that:
7.2.1 Franchisor shall use the Franchisee Database only in the manner
authorized and permitted hereunder by Franchisor and only during
the Term.
7.2.2 Franchisor shall use the Franchisee Database only outside of the
Territory and shall only use the Franchisee Database in or as part
of the System.
7.2.3 During the Term of this Agreement, Franchisor, where reasonably
possible, shall identify Franchisee as the owner of the Franchised
Business and/or at such times and places as Franchisor references
the Franchised Business or the Franchisee Database.
7.2.4 Franchisor's right to use the Franchisee Database is limited to
such uses as are authorized under this Agreement, and any material
unauthorized use thereof shall constitute an infringement of
Franchisee's rights.
7.2.5 Franchisor shall not use the Franchisee Database to incur any
obligation or indebtedness on behalf of Franchisee.
7.2.6 Franchisor shall not market or deliver access to the Franchisee
Database from any jurisdiction outside of the Territory unless and
until all regulatory approvals, licenses and permits required by
the applicable Rights Society of any such jurisdiction and/or the
applicable Regulatory Body have been obtained, and, Franchisor, at
its sole cost and expense, shall prepare and submit any and all
appropriate applications, data and other information required by
any such Rights Society or Regulatory Body in such jurisdiction,
and have obtained all requisite approvals, licenses and permits
for authorized and compliant delivery of the Franchisee Database
in such jurisdiction. Notwithstanding the foregoing, Franchisee
undertakes to provide reasonable assistance, by means of letter,
telephone, fax, e-mail or similar communication, on behalf of
Franchisor with respect to facilitating the acquisition of any
requisite regulatory approvals, licenses and/or permits which
involves the Franchisee Database and which may be required by such
Rights Societies outside of the Territory, including for (a)
performing rights, (b) master rights, (c) artist rights, (d)
ephemeral rights and (e) mechanical rights.
7.2.7 Franchisor, at its sole cost and expense, shall be responsible for
and shall promptly pay, any and all royalties and other fees,
assessments, taxes or charges imposed by any Regulatory Body or
Rights Society having jurisdiction with respect to operation of
the System outside of the Territory and for delivery of, and
access to, the Franchisor Digital Music Database outside of the
Territory, and
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Franchisor undertakes to assure on-going legal compliance with the
requirements of applicable rules and laws with respect to
operation of the System and the Franchisor Digital Music Database
outside of the Territory, including, but not limited to, the
timely filing of any reports required by any Rights Society or
Regulatory Body with jurisdiction thereof. Upon execution by
Franchisee of Franchisor's customary non-disclosure agreement,
Franchisee shall be permitted reasonable access to Franchisor's
books and records evidencing Franchisor's compliance with the
foregoing.
7.2.8 The right and license of the Franchisee Database granted hereunder
to Franchisor is exclusive only outside of the Territory, and
Franchisee thus may:
7.2.8.1 Subject to Sections 13 and 18 herein, itself use, and
grant franchises to others to use, the Franchisee
Database within the Territory.
7.2.8.2 Subject to Sections 1.1.2, 1.1.3, 13 and 18, establish,
develop, and franchise other systems, different from the
System franchised herein, without offering or providing
Franchisor any rights in, to, or under such other
systems.
7.2.8.3 Subject to Sections 13 and 18, itself use, and grant
franchises to others to use, the Franchisee Database
within the Territory during the Term.
7.2.9 As between the parties hereto, Franchisee is the owner of all
right, title, and interest in and to the Franchisee Database and
the goodwill associated with and/or embodied or symbolized
therein.
7.2.10 Franchisor shall not directly or indirectly contest the validity
or the ownership of the Franchisee Database.
7.2.11 Franchisor's use of the Franchisee Database pursuant to this
Agreement does not give Franchisor any ownership interest or other
interest in or to the Franchisee, except the license granted
herein.
7.3 Franchisor shall, upon learning thereof, promptly notify Franchisee of any
unauthorized use of the Franchisee Database, any challenge to the validity of
the Franchisee Database, or any challenge to Franchisee's ownership of, or
Franchisor's right to use, the Franchisee Database. Franchisor acknowledges that
Franchisee has the sole right to direct and control any administrative
proceeding or litigation involving the Franchisee Database, including any
settlement thereof. Franchisee has the obligation to take action against uses by
others that may reasonably constitute material infringement of the Franchisee
Database.
7.4 Provided Franchisor is not in material breach of this Agreement has used
the Franchisee Database in accordance with this Agreement, Franchisee will
defend at Franchisee's expense
22
against any third party claim, suit, or demand involving the Franchisee Database
licensed hereunder and arising out of Franchisor's use thereof, provided, that
Franchisee is promptly notified in writing and is given complete authority and
information required for defending or settling any such claim, suit or demand
and, further provided, that Franchisor is not in material default or breach of
this Agreement. If, within a reasonable time Franchisee does not assume active
control of such third party claim, suit, or demand (each, an "Action"),
Franchisor may assume authority over such Action, and upon written notice to
Franchisee of the assumption of such authority, Franchisee shall therewith be
responsible to pay for any and all reasonable legal or other expenses incurred
by Franchisor in connection with the defense of the Action. Franchisee shall
not, without the prior written consent of Franchisor, settle or compromise or
consent to the entry of any judgment in any pending or threatened Action, suit
or proceeding in respect of which indemnification may be sought hereunder unless
such settlement, compromise or consent includes an unconditional release of
Franchisor from any and all liability arising out of such Action.
7.5 In the event of any litigation or administrative proceeding relating to the
Franchisee Database, Franchisor shall execute any and all reasonable documents
and do all reasonable acts as may, in the reasonable opinion of Franchisee, be
necessary to carry out such defense or prosecution, including, but not limited
to, becoming a nominal party to any legal action. Except to the extent that such
litigation is the result of Franchisor's use of the Franchisee Database in a
manner inconsistent with the terms of this Agreement, Franchisee agrees to
reimburse Franchisor for its out of pocket costs in performing such acts.
Notwithstanding the foregoing, Franchisee shall not pay for ordinary course of
business expenses of Franchisor during any such defense or prosecution,
including, but not limited to, the salary costs of Franchisor employees.
7.6 The provisions of Section 7.4 and 7.5 (collectively, the "Franchisee Action
Coverage Provisions") shall survive termination of this Agreement for a period
of two years (the "Franchisee Action Extension Period"), it being understood
that if notice of any Action under the Franchisee Action Coverage Provisions is
made within the Franchisee Action Extension Period, such Franchisee Action
Coverage Provision shall survive until such Action is definitively settled or a
court of competent jurisdiction shall have finally determined that such Action
shall not exist to the extent claimed by the other party.
8. CONFIDENTIAL MANUAL
8.1 Franchisee shall at all times treat the Technical Manual, all supplements
and revisions thereto, any other manuals created for or approved for use in the
operation of the Franchised Business and the information contained therein as
confidential, and shall use all reasonable efforts to maintain the
confidentiality of such information. Franchisee shall not at any time, without
Franchisor's prior written consent, copy, duplicate, record, or otherwise
reproduce the foregoing materials, in whole or in part, nor otherwise make the
same available to any unauthorized person. Franchisee may disclose such
information and materials only to such of Franchisee's employees, agents, or
others who must have access to it in connection with their employment or the
operation of the Franchised Business, in which event Franchisee shall obtain the
agreement of such persons and entities to maintain the confidentiality thereof.
The Technical Manual shall remain at all times the sole property of Franchisor.
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8.2 Only Franchisor, acting reasonably, may, from time to time, revise the
contents of the Technical Manual, and Franchisee expressly agrees within a
reasonable period, to promptly comply with each new or changed standard,
provided the same is reasonable, is necessary to improve quality in order to
more efficiently and better serve customers and does not result in Franchisee
having to incur material additional expenses and/or purchase new material
equipment or software. Franchisor shall advise Franchisee of any and all changes
to the Technical Manual. Franchisor shall at all times ensure that Franchisee
has reasonable access to the on-line version of the Technical Manual and
Franchisee, agrees to keep current with respect to Technical Manual mandates. In
the event of any dispute as to the content of the Technical Manual, the terms of
the master copy of the Technical Manual maintained on-line by Franchisor shall
be controlling.
9. CONFIDENTIAL INFORMATION
9.1 Franchisee shall not, during the Term of this Agreement or thereafter for a
period of one (1) year, communicate, divulge, or use for the benefit of any
other person, persons, partnership, association, or corporation any confidential
information, knowledge, technology, know-how or other data concerning the
System, the operation of the Franchised Business, or the Franchisor Intellectual
Property (the "Confidential Information"), which may be communicated to
Franchisee, or of which Franchisee may be apprised, by virtue of Franchisee's
operation under the terms of this Agreement. Franchisee shall divulge
Confidential Information only to such of Franchisee's employees or agents as
must have access to it in order to operate the Franchised Business. Confidential
Information shall not include information which Franchisee can demonstrate came
to Franchisee's attention prior to disclosure thereof by Franchisor, or which,
at or after the time of disclosure by Franchisor to Franchisee, had become or
later becomes a part of the public domain, through publication or communication
by others, or which Franchisee is required by law to disclose.
9.2 Franchisee acknowledges that the provisions in this Section 9 are and have
been a primary inducement to Franchisor to enter into this Agreement, and that
any failure to comply with the requirements of Section 9.1 may cause Franchisor
irreparable injury without an adequate remedy at law. Franchisee agrees that
Franchisor shall be entitled, in addition to any other remedies that may be
available in law, equity or otherwise, to obtain specific performance of, or an
injunction against any violation or threatened violation of, the requirements of
Section 9.1.
9.3 Franchisor shall not, during the term of this Agreement or thereafter for a
period of one (1) year, communicate, divulge, or use for the benefit of any
other person, persons, partnership, association, or corporation any Confidential
Information which may be communicated to Franchisor, or of which Franchisor may
be apprised, by virtue of Franchisor's operation under the terms of this
Agreement. Franchisor shall divulge Confidential Information only to such of
Franchisor's employees or agents as must have access to it in order to operate
the System. Confidential Information shall not include information which
Franchisor can demonstrate came to Franchisor's attention prior to disclosure
thereof by Franchisee, or which, at or after the time of disclosure by
Franchisee to Franchisor, had become or later becomes a part of the public
24
domain, through publication or communication by others, or which Franchisor is
required by law to disclose.
10. ACCOUNTING, RECORDS AND REPORTING
10.1 Record Keeping and Reports by Franchisee; Audit Rights of Franchisor
10.1.1 Franchisee shall keep complete and accurate records and books of
account containing all information necessary for the computation
and verification of the amounts to be paid by Franchisee to
Franchisor hereunder. Said records and books shall be kept for a
period of three years following the end of the accounting period
to which the information pertains.
10.1.2 Franchisee shall submit to Franchisor (i) the monthly report
pursuant to Section 4.7, and (ii) the monthly statement pursuant
to Section 5.8.
10.1.3 Franchisor or its designated agents shall have the right at a
reasonable time upon reasonable notice to examine and copy, at
its expense, all of Franchisee's books, records, and tax returns
related to the Franchised Business and Franchisee's audited
financial statements; to confer with Franchisee's independent
auditor concerning the details of Franchisee's financial reports
and condition; and to have an independent audit made. If an
inspection or audit should reveal that payments have been
understated in any report to Franchisor, then Franchisee shall
immediately pay to Franchisor the amount understated upon demand,
in addition to interest from the date such amount was due until
paid, at one and one half percent per month or the maximum rate
permitted by law, whichever is less. If an inspection discloses
an underpayment to Franchisor of ten percent or more of the total
amount that should have been paid to Franchisor during any six-
month period, Franchisee shall, in addition to repayment of such
understated amount, with interest, reimburse Franchisor for any
and all costs and expenses incurred in connection with the
inspection or audit (including, without limitation, reasonable
accounting and attorney's fees). The foregoing remedies shall be
in addition to any other remedies Franchisor may have, including,
without limitation the remedies for default.
10.2 Record Keeping by Franchisor; Audit Rights of Franchisee
10.2.1 Franchisor shall keep complete and accurate records and books of
account containing all information necessary for the computation
and verification of the amounts to be paid by Franchisor to
Franchisee hereunder and also with respect to the Revenue
Sharing. Said records and books shall be kept for a period of
three years following the end of the accounting period to which
the information pertains.
10.2.2 Franchisor shall submit to Franchisee the monthly statement
pursuant to Section 4.7 and 5.8.
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10.2.3 Franchisee or its designated agents shall have the right at a
reasonable time upon reasonable notice to examine and copy, at
its expense, only such of Franchisor's books and records as are
specifically related to the Franchised Business, the Revenue
Sharing and any other matter specifically providing for such
examination hereunder. Upon execution of Franchisor's customary
and reasonable non-disclosure agreement, Franchisee shall have
the right to confer with Franchisor's independent auditor
concerning the details of Franchisor's financial reports and
condition; and to have an independent audit made (at Franchisee's
sole cost and expense). If an inspection should reveal that
payments have been understated in any report to Franchisee, then
Franchisor shall immediately pay to Franchisee the amount
understated upon demand, in addition to interest from the date
such amount was due until paid, at one and one half percent per
month or the maximum rate permitted by law, whichever is less. If
an inspection discloses an underpayment to Franchisee of ten
percent or more of the total amount that should have been paid to
Franchisee during any six-month period, Franchisor shall, in
addition to repayment of such understated amount, with interest,
reimburse Franchisee for any and all costs and expenses incurred
in connection with the inspection (including, without limitation,
reasonable accounting and attorney's fees). The foregoing
remedies shall be in addition to any other remedies Franchisee
may have, including, without limitation the remedies for default.
11. ADVERTISING AND MARKETING
11.1 Recognizing the value of advertising and the importance of the
standardization of advertising programs to the furtherance of the goodwill and
public image of the System, the Franchisee agrees that all advertising by
Franchisee, with respect to the System in any medium shall be conducted in a
dignified manner, shall be of the highest caliber and shall conform to such
other reasonable standards and requirements as Franchisor may specify from time
to time in writing, provided, however, that the foregoing advertising
requirements shall be subject to culturally acceptable adaptation by Franchisee
and Franchisor's approval of such adaptation shall not unreasonably be withheld
or unduly delayed. Franchisee shall provide Franchisor with all advertising and
promotional materials it intends to use to promote the Franchised Business and
with English translations of all such materials at its sole expense. Franchisor
reserves the right to disapprove upon written notice to Franchisee any
advertising or promotional materials used by Franchisee, if in Franchisor's
reasonable judgement, such materials appear to have a material adverse effect
upon the System, infringe upon the proprietary rights of others, violate any law
or regulation, or subject Franchisor to any legal liability. Franchisee shall
immediately discontinue use of any disapproved advertising upon receipt of such
written notice.
11.2 Franchisee shall use its reasonable efforts, at its own expense, to
distribute, sell, advertise, promote and derive significant revenues from the
sale of products or services related to the Franchised Business.
26
11.3 At all times during the Term, Franchisee shall not, directly or
indirectly, place any of Franchisor's competitor's advertising banners,
promotional buttons, promotional links or other promotional materials or content
on any Web site owned or controlled by Franchisee or any affiliate of
Franchisee. Except as to Franchisor, Franchisee or any other of Franchisor's
franchisees, "competitor" shall mean any person or business entity engaged in
any enterprise, whether for profit or not, for (i) the streaming of live or
recorded music on the Internet, (ii) production and/or sale of the Web Bar
Listening Post or similar device for sampling music via the Internet and placed
in retail record stores; (iii) provision of broadcast quality music files via
the Internet to radio stations and/or other businesses requiring digital music
files; (iv) provision of "canned" music programs to businesses via the Internet;
(v) marketing, sale or merchandising of any of items (i) to (iv) excluding, for
certainty, CDs and household items and products (such as, without limitation,
stereos, VCRs, computers (hardware and software), cameras, DVDs, radios and
televisions); (vi) providing any pointers or links, which in the sole and
reasonable opinion of Franchisor, are linked to or from any other Web page or
Internet Site offering access, sale or delivery of any of the foregoing items
via the Internet. Notwithstanding the foregoing, Franchisee may, upon written
consent of Franchisor which will not be unreasonably withheld, sell advertising
on the Franchisee Web Site from companies which sell music products, provided
however, that such company does not focus a substantial portion of its marketing
program on music or derive a substantial portion of its sales from music or
music-related services or products (for example, ▇▇▇▇▇▇.▇▇▇ may be granted such
approval, but not ▇▇▇.▇▇▇).
11.4 Within 90 days of the execution of this Agreement, and on or before each
one-year anniversary of the commencement date of this Agreement, the Franchisee
shall provide Franchisor with a written marketing plan with respect to the
Franchised Business. Each such marketing plan shall include a marketing
timetable, sales projections, channels and methods of distribution, nature and
amount of advertising and advertising expenditures, and any other information
which Franchisor may ask Franchisee to include. Each marketing plan shall
contain specific information for the one-year period immediately succeeding its
submission and general estimates or projections for subsequent periods during
which this Agreement remains in effect.
12. RESTRICTIONS ON AND MANNER OF EXPLOITATION; WITHDRAWAL
12.1 The Proprietary Marks will not be used in conjunction with or commingled
with any other name, character, symbol, design, likeness, or literary or
artistic material, unless any such use is expressly permitted under this
Agreement or otherwise in writing by Franchisor.
12.2 Franchisor will have the right, by giving written notice to Franchisee, to
withdraw from the Franchised Business any element of the Franchisor Intellectual
Property if legal counsel of Franchisor delivers a written opinion that the use
or continued use of such element will violate or infringe the rights of any
third party ("Third Party Rights"), violate any law or regulation, or subject
Franchisor to any legal liability, and a copy of such opinion shall be forthwith
delivered to Franchisee. Nothing in this provision shall be construed to obviate
any representation or warranty of Franchisor which speaks as of the date hereof.
Upon the occurrence of any of the foregoing events, Franchisee shall have the
right, but not the obligation, to terminate this Agreement. In the event of any
termination due to Third Party Rights, Franchisor shall promptly
27
refund to Franchisee any and all fees paid to Franchisor on a pro-rata basis
with respect to any remaining period of the Term of this Agreement following
such termination date.
13. ASSIGNMENT, TRANSFER OR CONVEYANCE
13.1 Neither party shall during the Term, either voluntarily or by operation of
law, assign, transfer, convey or encumber this Agreement or any right or
interest thereunder without first obtaining the written consent of the other
party, and any such assignment, transfer, conveyance or encumbrance without such
written consent shall be null, void and of no force and effect. If Franchisee is
a corporation, the capital stock thereof shall not during the Term be sold,
assigned, pledged, mortgaged or transferred without the prior written consent of
Franchisor. Either party's written consent to any assignment, transfer,
conveyance or encumbrance shall not be unreasonably withheld or unduly delayed.
Franchisor's or Franchisee's written consent to any such assignment, transfer,
conveyance or encumbrance shall, however, be conditional upon any such assignee,
transferee, conveyee or encumbrancee being of good moral character and
reputation, having both a credit rating and competent business qualifications
reasonably satisfactory to Franchisor or Franchisee, as the case may be. In the
event that either party consents in writing to any such assignment, transfer,
conveyance or encumbrance, Franchisee or Franchisor, as the case may be, shall
remain fully liable for the performance of all obligations under the terms and
conditions of this Agreement unless any such purchaser, assignee or transferee
shall fully agree to enter into a similar agreement with Franchisee or
Franchisor, as the case may be, or fully assume the entire obligations of
Franchisee or Franchisor, as the case may be, under this Agreement and any other
written agreements then existing between Franchisee and Franchisor. In the event
of any written consent by either party to any assignment, transfer, conveyance
or encumbrance by the other party, whether voluntarily or by operation of law,
the assigning party shall reimburse the consenting party for all reasonable fees
and expenses, including attorney's fees, incurred by the consenting party, as a
result of such assignment, transfer, conveyance or encumbrance. Upon the
reasonable request of Franchisor, Franchisee shall promptly provide to
Franchisor a list of stockholders or other equity holders of ownership interests
in Franchisee. In addition, the written consent of the other party shall not be
unreasonably withheld or delayed with respect to any loans made to the
requesting party by or through recognized international institutional lenders,
which loan by its terms imposes a security interest or other Encumbrance on such
party's Digital Music Database.
13.2 Notwithstanding anything to the contrary contained in this Agreement, the
transfer of less than an aggregate of 10% equity interest in Franchisee in a
single or series of transactions, which does not have the affect of transferring
control, shall not require the prior approval of Franchisor; provided that
Franchisee notifies Franchisor in writing of such transfer(s) within 30 days
following such transfer and; further provided that no transfer, together with
other previous, simultaneous, or proposed transfers, shall have the effect of
transferring a controlling interest in the Franchisee. For the purposes of this
Section 13.2, "control" shall mean the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
person, corporation or other business entity, whether through the ownership of
voting securities, by contract, or otherwise.
28
13.3 Upon the death or mental incompetence during the Term of a person owning
all or any interest in Franchisee, the executor, administrator, or personal
representative of such person shall transfer within three months after such
death or mental incompetence his interest to a third party approved by
Franchisor, which approval shall not be unreasonably withheld or unduly delayed.
Such transfers, including, without limitation, transfers by devise or
inheritance, shall be subject to the same conditions as any inter vivos
transfer. However, in the case of transfer by devise or inheritance, if the
heirs or beneficiaries of any such person are unable to meet the conditions in
this Section 13 for any reason, the personal representative of the deceased
shareholder shall have reasonable time to dispose of the deceased's interest in
the Franchisee, which disposition shall be subject to all the terms and
conditions for transfers contained in this Agreement. If the interest is not
disposed of within nine months, Franchisor may immediately terminate this
Agreement by giving Franchisee written notice thereof.
14. RIGHT OF FIRST REFUSAL
If, during the Term, Franchisee shall receive a bona fide offer to purchase
during the Term the Franchised Business from a bona fide purchaser or purchasers
then, in such event, Franchisor shall have the first right (hereinafter called
the "Right of First Refusal") to purchase the Franchised Business at the same
price and under the same terms and conditions as any such bona fide offer.
Franchisee shall submit to Franchisor in writing, the complete details of any
such bona fide offer and the name of any such bona fide purchaser or purchasers
together with any additional facts or details concerning any such bona fide
offer or bona fide purchaser or purchasers that Franchisor may request.
Franchisor shall have 30 days after the receipt of such complete details from
Franchisee or from the written receipt of any such requested additional facts or
details from Franchisee, to purchase the Franchised Business for the same price
and under the same terms and conditions of any such bona fide offer received by
Franchisee from any such bona fide purchaser or purchasers. If Franchisor elects
not to exercise its Right of First Refusal as provided herein, then, in such an
event, Franchisee may accept any such bona fide offer from any such bona fide
purchaser or purchasers subject, nevertheless, to the terms and provisions of
Section 13, it being the intention and express understanding of the parties
hereto that nothing contained in this Section 14 shall either abrogate or take
precedence over the terms and provisions of Section 13, or Franchisor's right
expressly contained therein to consent, in writing, to any assignment, transfer,
conveyance or encumbrance of this Agreement or right or interest thereunder. For
purposes of clarity, the Franchisee's enterprises and companies other than the
"Franchised Business" shall not be subject to this provision, and in the event
any bona fide offer to purchase such other enterprises or companies encompasses
the Franchised Business, Franchisor's rights hereunder shall be limited only to
the extent of the Franchised Business and reasonable pro-rata determinations
shall be made to accommodate any Right of First Refusal arising under any such
circumstances.
15. TERMINATION
This Agreement shall terminate upon the occurrence of any of the following
events:
15.1 By either party if the other party is in breach of any provision of this
Agreement and fails to fully cure such breach within 30 days after receiving
notice thereof from the non-breaching party, then the non-breaching
29
party shall have the right to immediately terminate this Agreement by giving the
breaching party written notice of termination.
15.2 By either party if the other party breaches any material third party
obligation and fails to fully cure such breach within 30 days after receiving
notice thereof from the non-breaching party, then the non-breaching party shall
have the right to immediately terminate this Agreement by giving the breaching
party written notice of termination.
15.3 By Franchisor or Franchisee, as the case may be, during the Term, if the
other such party (the "Insolvent Party"), whether voluntarily or compulsory, is
adjudged a bankrupt or makes an assignment for the benefit of creditors or files
any petition for arrangement or reorganization or suffers the appointment of a
receiver or custodian over its business or assets, or if a final judgement
against the Insolvent Party remains unsatisfied or of record for 90 days or
longer, or if the Insolvent Party is liquidated or dissolved or takes steps to
cease or ceases its business, or if execution is levied against any asset of the
Insolvent Party, or suit to foreclose any lien or mortgage against any asset of
the Insolvent Party is instituted against Insolvent Party and not dismissed
within 90 days, or if any asset of the Insolvent Party is sold after levy. The
non-Insolvent Party, at its option, after the occurrence of any of the foregoing
events, may immediately terminate this Agreement by giving the Insolvent Party
written notice of termination.
15.4 By Franchisor or Franchisee, as the case may be, during the Term, if the
other such party (the "Convicted Party"), during the Term is convicted of a
felony or any other crime or offense that is reasonably likely to adversely
affect the System, the Franchisor or Franchisee Intellectual Property as the
case may be, the goodwill associated therewith or the respective interest
therein.
15.5 By Franchisor immediately upon giving Franchisee written notice of
termination if within three months of the execution of this Agreement,
Franchisee has failed to take good faith steps to exploit the rights granted to
it herein.
15.6 By Franchisor giving Franchisee written notice of termination in
accordance with Section 13.3.
15.7 By Franchisor giving Franchisee written notice of termination in
accordance with Section 16.
15.8 By Franchisee if within 45 days after delivery to Franchisor of a Defect
Notice to cure any Material Interruption (as defined in Section 3.19 above) with
regard to operation of the System, which Material Interruption is not
attributable to any third party products, services, personnel (including without
limitation, Franchisee personnel) or materials outside of Franchisor's
reasonable control, and if within such 45 day period such Material Interruption
has not been substantially remedied to the reasonable satisfaction of
Franchisee, then the Franchisee shall have the right to immediately terminate
this Agreement by giving Franchisor written notice of termination ("Defect
Termination") and Franchisor shall refund and/or credit to Franchisee on a
pro-rata basis such fees as previously paid by Franchisee hereunder which are
attributable to the Term of this Agreement following the date of the Defect
Termination.
30
15.9 By Franchisor if within 45 days after delivery to Franchisee of a Defect
Notice to cure any Material Interruption (as defined in Section 3.19 above) with
regard to operation of the Franchised Business, which Material Interruption is
not attributable to any third party products, services, personnel or materials
outside of Franchisee's reasonable control, and if within such 45 day period
such Material Interruption has not been substantially remedied to the reasonable
satisfaction of Franchisor, then the Franchisor shall have the right to
immediately terminate this Agreement by giving Franchisee written notice of
termination ("Defect Termination").
15.10 By Franchisor, at its sole and unique discretion, upon payment to
Franchisee of $2,000,000 dollars, which payment shall not be refused by
Franchisee.
16. BLOCKED CURRENCY
16.1 In the event that Franchisee shall be prohibited or restricted from making
payment of any monies at the time when same are due and payable to Franchisor
under this Agreement by reason of the laws or currency regulations within the
Territory, Franchisee shall promptly so advise Franchisor in writing. Franchisee
shall, upon Franchisor's request, deposit any such blocked funds to the credit
of Franchisor in a bank or banks or other depository in the Territory designated
in writing by Franchisor, or pay them promptly to such persons or entities as
Franchisor shall designate in writing. Franchisor shall have the right to
immediately terminate this Agreement if Franchisee is unable to make
arrangements reasonably satisfactory to Franchisor for Franchisor's receipt of
such blocked funds as contemplated above in this Section.
16.2 In the event that Franchisor shall be prohibited or restricted from making
payment of any monies at the time when same are due and payable to Franchisee
under this Agreement by reason of the laws or currency regulations within any
territory, Franchisor shall promptly so advise Franchisee in writing. Franchisor
shall, upon Franchisee's request, deposit any such blocked funds to the credit
of Franchisee in a bank or banks or other depository outside the Territory
designated in writing by Franchisee, or pay them promptly to such persons or
entities as Franchisee shall designate in writing. Franchisee shall have the
right to immediately terminate this Agreement if Franchisor is unable to make
arrangements reasonably satisfactory to Franchisee for Franchisee's receipt of
such blocked funds as contemplated above in this Section.
17. OBLIGATIONS UPON TERMINATION
Upon termination of this Agreement, this Agreement and all rights granted
hereunder to Franchisee shall forthwith terminate, and within 30 days
thereafter:
17.1 Franchisee shall immediately cease to operate the Franchised Business and
shall not thereafter, directly or indirectly, represent to the public or hold
itself out as a present or former franchisee of Franchisor.
17.2 Franchisee shall immediately and permanently cease to use, in any manner
or medium whatsoever, the Franchisor Intellectual Property, and any identifying
characteristics or embodiments of the System, including, without limitation, the
Webcasting Technology, the
31
Franchisor Digital Music Database, all confidential methods, procedures and
techniques, and software, technology or devices associated with the System.
Franchisee shall promptly remove from its place of business and the Franchisee
Web Site, and discontinue using for any purpose, any and all signs, fixtures,
furniture, furnishings, equipment, advertising materials, stationery, supplies,
forms or other articles or materials in whatever form which display or contain
any element of the Franchisor Intellectual Property or any distinctive features
or designs associated with the System.
17.3 Franchisee shall cease from using or disclosing any Confidential
Information or know-how related to the Franchised Business, the System, or the
Franchisor Intellectual Property.
17.4 Franchisee shall immediately deliver to Franchisor, and cooperate to
effect an orderly, expeditious and efficient transfer of the Technical Manual,
all computer software programs, databases and technologies, and all other
Franchisor Intellectual Property in whatever medium or form, and all records,
files, instructions, correspondence, and all other materials provided by
Franchisor related to the operation of the Franchised Business, and all copies
thereof in whatever medium (all of which are acknowledged to be Franchisor's
property), and shall retain no copy or record of any of the foregoing, excepting
only Franchisee's copy of this Agreement and of any correspondence between the
parties, and any other documents which Franchisee reasonably needs for
compliance with any provision of law. Franchisor shall do the same with respect
to any Franchisee property.
17.5 Franchisor and Franchisee agree to negotiate in good faith for a period of
60 days commencing on or prior to the termination of this Agreement or a
reasonable period following termination, but no later than within 60 days after
termination of this Agreement, with respect to a mutually acceptable arrangement
pursuant to which Franchisor would license permanent rights to use and access
the Franchisee Database and/or any and all digitized tracks contained in the
Franchisee Database. If the parties are unable to agree on any such arrangement
within such 60 day period, then neither party will have any further obligation
with respect to negotiating such arrangement.
17.6 Franchisor shall immediately cease to use and cause its franchisees to
cease to use, in any manner or medium, the Franchisee Database. However,
Franchisee shall take such action as may be necessary to cancel any assumed name
or equivalent registration which contains any of the Proprietary Marks or any
variation thereof or any other service ▇▇▇▇ or trademark of Franchisor, provided
that Franchisor shall reimburse Franchisee for all reasonable costs, expenses
and fees incurred by Franchisee in connection therewith and Franchisee shall
furnish Franchisor with evidence satisfactory to Franchisor of compliance with
this obligation within 30 days after termination of this Agreement. Franchisee
hereby grants to Franchisor an irrevocable power of attorney to the full extent
necessary to cancel any assumed name or equivalent registration which contains
any of the Proprietary Marks or any variation thereof or any other service ▇▇▇▇
or trademark of Franchisor, which power of attorney shall survive the
termination of this Agreement.
17.7 Franchisee shall promptly pay all sums owing to Franchisor and Franchisor
shall promptly pay all sums owing to Franchisee hereunder within 60 days of
termination. In the
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event that termination is due to Franchisee's breach of this Agreement then such
sums due by Franchisee shall include all damages, costs and expenses, including
reasonable attorneys' fees, incurred by Franchisor as a result of such breach.
Franchisor shall have the right within 60 days (but subject to at least 7 days
prior notice to Franchisee) following termination of this Agreement, to conduct
a reasonable inspection of Franchisee's offices, and conduct a review and/or an
audit of Franchisee's books and records, for the purpose, among other things, of
assuring Franchisee's compliance with the provisions of this Section 17.
17.8 Franchisee shall pay to Franchisor all damages, costs and expenses,
including reasonable attorneys' fees, incurred by Franchisor subsequent to
termination of this Agreement in obtaining injunctive or other relief for the
enforcement of any provisions of this Section 17.
17.9 Franchisee shall comply with all of the provisions of Section 17.
18. COVENANTS NOT TO COMPETE
18.1 Franchisee agrees that, except as otherwise approved in writing by
Franchisor, Franchisee shall not, during the Term or due to an event
contemplated in section 11.3 or 15.8, and, except in the situation where
termination is due to Franchisor's breach of this Agreement, for a continuous
uninterrupted one year period commencing upon the termination of this Agreement,
either directly or indirectly compete with Franchisor. For purposes of this
Agreement, "compete" shall mean engaging in any enterprise for (i) the streaming
of live or recorded music on the Internet, (ii) production and/or sale of the
Web Bar Listening Post or similar device for sampling music via the Internet and
placed in retail record stores; (iii) provision of broadcast quality music files
via the Internet to radio stations and/or other businesses requiring digital
music files; (iv) provision of "canned" music programs to businesses via the
Internet; (v) marketing, sale or merchandising of items (i) to (iv), excluding,
for certainty, CDs and household items and products (such as, without
limitation, stereo's, VCR's, DVD, computers (hardware and software), cameras,
radios, televisions); (vi) pointers or links, which in the sole and reasonable
opinion of Franchisor, are linked to or from any other Web page or Internet Site
offering access, sale or delivery of any of the foregoing items via the
Internet.
18.2 Franchisee agrees not to "compete" with any other franchisees of
Franchisor or establish customers in their respective exclusive territories for
one year from the expiration of the Term of this Agreement.
18.3 Franchisee agrees that during the Term of this Agreement, except as
otherwise approved in writing by Franchisor, Franchisee shall not, either
directly or indirectly, for itself, or through, on behalf of, or in conjunction
with any person, persons, partnership or corporation, intentionally divert or
attempt to divert any business or customer of the Franchised Business or other
franchisee of Franchisor, to any competitor, or competing business, by direct or
indirect inducement or otherwise, or intentionally do or perform, directly or
indirectly, any other act materially injurious or materially prejudicial to the
goodwill associated with the Franchisor Intellectual Property or the System.
33
18.4 Franchisee and Franchisor agree that neither party shall during the Term
and for a period of one (1) year thereafter seek to employ any person who is at
that time employed by the other party or otherwise directly or indirectly induce
such person to leave his or her employment.
18.5 These covenants against competition shall not apply to ownership by
Franchisee of less than a 10% beneficial interest in the outstanding equity
securities of any publicly held corporation even if that corporation is in
competition with Franchisor.
18.6 Franchisee expressly agrees that the existence of any claims it may have
shall not constitute a defense to the enforcement by Franchisor of the covenants
described in this Section 18. Franchisee shall pay all costs and expenses
(including attorneys' fees) incurred by Franchisor in connection with the
enforcement of these covenants.
18.7 Franchisee agrees that each of the foregoing covenants will be constructed
as independent of any other covenant or provision. If all, parts or any portion
of a covenant in this Agreement is held unreasonable or unenforceable by a court
or agency having valid jurisdiction in an unappealed final decision to which
Franchisor is a party, Franchisee expressly agrees to be bound by any lesser
covenant subsumed within the terms of such covenant that imposes the maximum
duty permitted by law, as if the resulting covenant were separately stated in
and made a part of this Section.
18.8 Each of these covenants is a separate and independent covenant in each of
the separate jurisdictions in which they may be enforced. To the extent that any
covenant may be determined to be judicially unenforceable in any jurisdiction,
that covenant shall not be affected with respect to any other jurisdiction.
18.9 Franchisee acknowledges that a violation of any of these covenants may
result in irreparable injury to Franchisor for which no adequate remedy may be
available, and that it may be difficult to determine the resulting damages to
Franchisor. Franchisee agrees that Franchisor shall be entitled, in addition to
any other remedies Franchisor may have in law, equity or otherwise, to obtain
specific performance of, or an injunction against any violation or threatened
violation of the requirements of this Section 18.
18.10 Franchisor agrees that it shall not grant any other franchises or similar
rights within the Territory to any competitor of Franchisee, which franchise or
rights (a) are related to the System and/or any Enhancements thereto, and (b)
would become effective during the Term of this Agreement. For purposes of
clarity, the foregoing covenant shall not apply to any Nonlicensed Franchisor
Intellectual Property except where separate written agreement with respect to
such subject matter is made between the parties.
19. TAXES, PERMITS, AND INDEBTEDNESS
19.1 Franchisee shall promptly pay to Franchisor an amount equal to any sales
tax, gross receipts tax, or similar tax imposed on Franchisor with respect to
any payments made by Franchisor on behalf of Franchisee if required under this
Agreement, unless the tax is credited against income tax otherwise payable by
Franchisor.
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19.2 In the event of any bona fide dispute as to liability for taxes assessed
or other indebtedness, Franchisee may contest the validity of the amount of the
tax or indebtedness in accordance with the procedures of the taxing authority or
applicable law; however, in no event shall Franchisee permit a tax sale or
seizure by levy of execution or similar writ or warrant, or attachment by a
creditor, to occur against the Franchised Business or any of its assets.
19.3 Each party shall notify the other party in writing within five days after
the commencement of any action, suit, or proceeding and of the issuance of any
order, writ, injunction, award, or decree of any court, agency, or other
governmental instrumentality which may materially adversely affect the operation
or financial condition of such respective party's business as it relates to this
Agreement.
20. INDEPENDENT CONTRACTOR
20.1 It is understood and agreed by the parties hereto that this Agreement does
not create a fiduciary relationship between them, and Franchisee shall be an
independent contractor and that nothing in this Agreement is intended to
constitute either party an agent, legal representative, subsidiary, joint
venturer, partner, employee or servant of the other for any purpose whatsoever.
20.2 It is understood and agreed that nothing in this Agreement authorizes
either party to make any contract, agreement, warranty or representation on the
other's behalf, or to incur any debt or other obligation in the other's name,
and that neither party shall in any event assume liability for, or be deemed
liable hereunder as a result of, any such action, or by reason of any act or
omission of the other party or any claim or judgement arising therefrom. Except
as provided in Section 21 hereof, the parties hereto, as the case may be, shall
have no liability with respect to their respective obligations under this
Agreement or otherwise for indirect, special, incidental, consequential,
punitive or exemplary damages, whether in contract, in tort or otherwise,
including, but not limited to, loss of use, revenue or profit.
21. INDEMNIFICATION
21.1 Except as otherwise provided in Section 7.5, Franchisee agrees to
indemnify and hold harmless Franchisor, and Franchisor's directors, officers,
employees, shareholders, agents, attorneys, designees, successors and assigns
from and against any and all claims, costs, damages, liabilities and expenses
(individually, a "Claim" and collectively, "Claims"), including without
limitation, reasonable attorneys' fees and expenses resulting from or arising
out of, directly or indirectly, Franchisee's performance or lack of performance,
and/or breach or alleged breach of any representation, warranty, or any other
provision of this Agreement.
21.2 Except as otherwise provided in Section 6.5, Franchisor agrees to
indemnify and hold harmless Franchisee, its directors, officers, employees,
agents, attorneys, successors and assigns authorized hereunder, from and against
any and all Claims, including without limitation, reasonable attorneys' fees and
expenses resulting from or arising out of, directly or indirectly, Franchisor's
performance or lack of performance and/or breach or alleged breach of any
representation, warranty or other provision of this Agreement.
35
21.3 Promptly after receipt by an indemnified party of notice of the
commencement of an action involving any Claim, the indemnified party shall give
written notice to the indemnifying party, provided, that the failure of the
indemnified party to give such notice shall not relieve the indemnifying party
of any of its obligations under this Section 21 except to the extent that the
indemnifying party is actually prejudiced by such failure. The indemnifying
party shall assume and control the defense, and all costs thereof, of any Claim
subject to indemnification hereunder. The indemnified party shall have the
right, at its own expense to participate in the defense of any Claim against
which it is indemnified without relieving the indemnifying party of any
obligation of indemnity hereunder; however, it shall have no right to consent to
judgement or agree to settle any such Claim. No indemnifying party, in the
defense of any such Claim, shall, except with the written consent of the
indemnified party, consent to entry of any judgement or enter into any
settlement which does not include, as an unconditional term, the grant by the
claimant, to the indemnified party, of a release from all liabilities in respect
of such Claim.
21.4 Any claim for indemnification under this Section 21 shall survive the
termination of this Agreement for a period of two years (it being understood
that if notice of any such Claim is made within the applicable time period, such
Claim shall survive until such Claim is paid in full or a court of competent
jurisdiction shall have finally determined that such Claim shall not exist to
the extent claimed by the indemnified party and then until such Claim shall be
paid to the extent so determined.
22. MUTUAL REPRESENTATIONS AND WARRANTIES
Each party represents and warrants to the other that: (a) it has full power and
legal right to execute and deliver this Agreement and to perform its obligations
under this Agreement; (b) the execution, delivery and performance of this
Agreement have been authorized by all required action, corporate or otherwise,
and do not violate or conflict with any provisions of its respective charter,
By-laws or governing documents or any of its contractual obligations or
requirements of law binding upon it; (c) this Agreement constitutes its legal,
valid and binding obligation, enforceable against it in accordance with its
terms; (d) it has and shall maintain in full force and effect throughout the
Term, all governmental permits, licenses and authorizations required on its part
to perform its obligations under this Agreement; and (e) there is no pending or,
to the knowledge of each respective party, any threatened, legal,
administrative, arbitration or other proceeding or governmental investigation
which is likely to have a material adverse effect on performance of this
Agreement.
23. APPROVALS AND WAIVERS
23.1 Whenever this Agreement requires the prior approval or consent of
Franchisor or Franchisee, as the case may be, the requesting party shall make a
timely written request to the other such party, and any such approval or consent
shall be deemed granted only to the extent obtained in writing in response to
such request. In the case where such prior approval or consent provides that it
shall not be unreasonably withheld, if the requesting party does not receive a
response from the other such party within ten (10) business days from the
confirmed date of receipt of such request by the other such party, such approval
or consent shall be deemed given by the other such party. For purposes of this
Agreement, the term "business days" shall mean
36
any day on which the principle executive offices of the Toronto Dominion Bank
located in ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, are open for business.
23.2 Except as otherwise provided in this Agreement or any other written
agreement between Franchisor and Franchisee, Franchisor makes no warranties or
guarantees upon which Franchisee may rely, as to merchantability and fitness of
the System for a particular purpose or that the Franchisor Intellectual Property
as developed and designed will meet any performance requirements of or will
perform error free or in conformance with the needs or requirements of
Franchisee or any Franchisee customer.
23.3 No failure of a party to exercise any power reserved to it by this
Agreement, or to insist upon strict compliance by the other party with any
obligation or condition hereunder, and no custom or practice of the parties at
variance with the terms hereof, shall constitute a waiver of such party's right
thereafter to demand exact compliance with any of the terms herein. Waiver by a
party of any particular default by the other party shall not affect or impair
such party's rights with respect to any subsequent default of the same, similar,
or different nature; nor shall any delay, forbearance, or omission of a party to
exercise any power or right arising out of any breach or default by the other
party of any of the terms, provisions, or covenants hereof, affect or impair
such party's right to exercise the same.
24. NOTICES
All notices, requests, instructions, or other communications which are required
or permitted to be given hereunder shall be in writing and shall be delivered by
messenger, sent by certified mail return receipt requested or by a recognized
international courier, to the other party as set forth below, or to such other
address as the party to whom notice is to be given may have furnished to the
other party in writing. Any such communication shall be deemed to have been
given when (i) delivered, if delivered by messenger, (ii) on receipt, if sent by
mail, and (iii) on the third business day after dispatch, if sent by a
recognized international courier and confirmation of receipt is obtained
therefor by the sender (without limiting the generality of the foregoing,
Federal Express, DHL and UPS shall be deemed to be recognized overnight couriers
for purposes of this Agreement).
Notices to FRANCHISOR:
musicmusicmusic, inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail Address: ▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
With a copy to:
Wuersch & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail Address: ▇▇▇▇▇▇▇@▇▇-▇▇▇.▇▇▇
Notices to FRANCHISEE:
IDARA
__________________________________
__________________________________
Facsimile No.: ___________________
E-mail Address: __________________
With a copy to:
▇▇▇▇ & Berlis
▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Tower P.O. Box 754
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
E-mail Address: ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
-------------------------
Any notice shall be deemed to have been given at the date and time it is
confirmed to have been received by the other party.
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25. MODIFICATION
This Agreement may not be orally cancelled, changed, modified or amended, and no
cancellation, change, modification or amendment shall be effective or binding,
unless in writing and signed by all the parties to this Agreement.
26. ENTIRE AGREEMENT
This Agreement, including all Exhibits and all other documents referred to
herein which form a part hereof, contains the entire understanding of the
parties hereto with respect to the subject matter contained herein and therein.
This Agreement supersedes all prior agreements and understanding between or
among the parties with respect to such subject matter
27. SEVERABILITY
If any provision of this Agreement is found to be void and unenforceable by a
court of competent jurisdiction, the remaining provisions of this Agreement
shall nevertheless be binding upon the parties with the same effect as though
the void or unenforceable part had been severed and deleted. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceable without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
28. STRICKEN WORDS OR PHRASES
If any words or phrases in this Agreement shall have been stricken out or
otherwise eliminated, whether or not any other words or phrases have been added,
this Agreement shall be construed as if the words or phrases so stricken out or
otherwise eliminated had never appeared in this Agreement.
29. GOVERNING LAW
All issues concerning the relative rights of the parties hereto and the
construction, validity and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to conflict of laws that would require the application of the laws
of any jurisdiction other than the State of New York.
30. ARBITRATION
The parties hereto agree to submit to arbitration any and all matters in dispute
or in controversy among them concerning the terms and provisions of this
Agreement or the application thereof. All such disputes and controversies shall
be determined and adjudged by the decision of an arbitrator (hereinafter
sometimes called the "Arbitrator") selected by mutual agreement of the parties
hereto or if the parties hereto fail to reach agreement on the Arbitrator within
ten days after a party has notified the other of its interest to submit a matter
to arbitration, the Arbitrator shall be selected by the American Arbitration
Association upon application made to it for such purpose by the parties.
Arbitration shall take place in New York, New York or such other place as the
parties hereto may mutually agree to in writing. The Arbitrator shall reach and
render a
39
decision in writing with respect to the amount, if any, of payment respecting
the disputed matter. The arbitration proceedings shall be held in accordance
with the applicable rules of the American Arbitration Association. Any award
rendered shall be final and conclusive upon the parties and a judgment thereon
may be entered in the highest court of the forum, state or federal, having
jurisdiction. The fees and expenses of the Arbitrator and the respective fees
and expenses of the parties hereto in connection with any such arbitration
(including, without limitation, reasonable fees and expenses of legal counsel
and consultants) shall be paid by the party against whom a decision by the
Arbitrator is rendered. Notwithstanding any other provision herein, this Section
30 shall survive the termination of this Agreement.
31. RIGHTS AND REMEDIES NOT INCONSISTENT OR IN EXCLUSION
Any and all rights and remedies which either party may have under this Agreement
or by operation of law, either at law or in equity, upon any breach, shall be
distinct, separate or cumulative and shall not be deemed inconsistent with each
other; and no one of them, whether exercised by said party or not, shall be
deemed to be in exclusion of any other; and any two or more of all such rights
and remedies may be exercised at the same time, or separately as desired.
32. INTERPRETATION
Notwithstanding any rule of law or custom to the contrary, neither this
Agreement nor any other agreement or document collateral to or otherwise
relating to this Agreement shall be interpreted or construed against any party
merely by reason of the fact that such agreement or document was prepared by or
at the direction of such party or that such party drafted or caused this
Agreement to be drafted.
33. CURRENCY REFERENCE
All references to dollars and payments to be made hereunder, including the
Exhibits attached hereto, shall be references to United States dollars unless
expressly stated otherwise in the applicable provision.
34. FUTURE COOPERATION
Each party hereto shall cooperate and shall take such further action and shall
execute and deliver such further documents as may be reasonably requested by any
other party in order to carry out the provisions and purposes of this Agreement.
35. HEADINGS; NUMBER AND GENDER
The section headings contained in this Agreement are for reference purposes
only, and shall not affect the meaning or interpretation of this Agreement. All
terms and words used in this Agreement, regardless of the number or gender in
which they are used, shall be deemed to include any other number and any other
gender as the context may require.
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36. BINDING EFFECT
The provisions of this Agreement shall extend to, bind and inure to the benefit
of each of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns, if any.
37. COUNTERPARTS
This Agreement may be executed in any number of counterparts and delivery via
facsimile, each of which original or facsimile signature pages when so executed
and delivered shall be deemed to be an original and all of which together shall
constitute but one and the same instrument. In the event of execution and
delivery of this Agreement via facsimile, such party shall promptly deliver to
the other party an originally executed exemplar therefor in the manner
prescribed under the provision for Notices set forth above.
[signature page to follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
FRANCHISOR:
musicmusicmusic, inc.
By: /s/ Wolfgang Spegg
-----------------------------
Name:
Title: President and CEO
FRANCHISEE:
IDARA
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
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EXHIBIT A
TERRITORY
Franchisee will as part of this Agreement have the right to deliver music to
RadioMoi subscribers world-wide and to enter into contractual agreements for all
other Franchisor Products and services in the following countries:
United Arab Emirates Ethiopia
Kuwait Somalia
Bahrain Djibouti
Qatar Tunis
Oman Azerbaijan
Yemen Armenia
Iraq
Iran
Syria
Jordan
Israel
Lebanon
Turkey
Kazakhstan
Uzbekistan
Turkmenistan
Afghanistan
Tajikistan
Kyrgyzstan
Saudi Arabia
Morocco
Algeria (including Western Sahara)
Mauritania
Senegal
Mali
Niger
Libya
Chad
Nigeria
Burkina
Central African Republican
Egypt
Sudan
Eritrea
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EXHIBIT B
FRANCHISOR INTELLECTUAL PROPERTY
1. Technology, know-how and execution rights with respect to standard
RadioMoi, including provision of front-end and back-end code,
2. Franchisor brand names in customized Arabic interface (with Franchisee
providing translations), and, subject to approval of Franchisor not to be
unreasonably withheld, Font Selection thereof.
3. The names, trademarks, service marks, and copyrights with respect to
"musicmusicmusic", "RadioMoi", "DDA", "Interactive Jukebox", "New Music
Jukebox", and the "Web-Bar Listening Post."
4. Content of the Franchisor Digital Music Database as of the date hereof and
as supplemented from time-to-time by the Franchisor.
5. Supplemental digital files related to access and operation of RadioMoi and
the Franchisor Digital Music Database, including text, graphics and other
supporting elements.
6. Know-how and execution rights required for installation and operation of
the Web Bar Listening Post.
7. Know-how and execution rights with respect to Webcasting Technology
44
EXHIBIT C
LOCATIONS
1. Worldwide, excluding the locations referred to on Exhibit "A".
45
EXHIBIT D
FRANCHISEE RADIOMOI PAGES
1. Incorporated by reference to the Franchisor's Website ▇▇▇▇▇▇▇▇.▇▇▇.
46