DIGITAL MUSIC SUBSCRIPTION SERVICE AGREEMENT
This
Digital Music Subscription Service Agreement (“Agreement”) is entered into as of
April 1, 2006 (the “Effective Date”) by and between Mohen, Inc. d/b/a Spiral
Frog, a Delaware corporation with an office at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇
▇▇▇▇ ▇▇▇▇▇, and each and every Affiliate (individually and collectively,
“Licensee”), and EMI Entertainment World Inc., a Delaware corporation with an
office at 1290 Avenue of the Americas, ▇▇▇ ▇▇▇▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(“EMI”).
WHEREAS,
Licensee desires to offer to Users (as defined below), solely via its digital
music service (the “Service”, defined and described more fully below and in the
annexed Schedule A), Limited Downloads and On-Demand Streams (as such terms
re
defined below) embodying Master Recordings (as defined below), including
Relevant Mast r Recordings (as defined below); and WHEREAS, Licensee desires
to
offer to Users, solely via the Service, Limited Video Downloads and On-Demand
Video Streams (as such terms are defined below) embodying A/V Master Recordings
(as defined below), including Relevant A/V Master Recordings (as defined
below);
and
WHEREAS,
Licensee desires to also offer to Users, solely via the Service, a Lyric
Search
Service (as defined below) and Lyric Displays (as defined below) embodying
Lyric
Files (as defined below), including Relevant Lyric Files (as defined below);
and
WHEREAS,
In connection with the operation of the Service, Licensee seeks licenses
from
EMI to reproduce and distribute the EMI Compositions as embodied in Limited
Downloads and On-Demand Streams, and to reproduce and display the Lyrics
of the
EMI Compositions in connection with the Lyric Search Service and as embodied
in
Lyric Displays, and EMI is prepared to issue such licenses to Licensee solely
in
accordance with the terms and conditions set forth herein, and solely for
the
purposes described herein;
NOW,
THEREFORE, in consideration of the promises contained in this Agreement and
for
other good and valuable consideration, the adequacy and sufficiency of which
each party hereby acknowledges the parties agree as follows:
1. Definitions.
For
purposes of this Agreement, the following terms shall have the
following
meanings:
1.1 “Advertising
Revenue”
shall
mean all amounts, fees, or other consideration received by, or paid or credited
in any way to, Licensee (or any entity acting on its behalf), and not returned
by Licensee, during the Term, in consideration of the placement and/or
distribution of advertisements, promotions, and/or sponsorships on the Service.
“Advertising Revenue” shall further include all amounts, fees, or other
consideration received by, or paid or credited in any way to, Licensee, and
not
returned by Licensee, (a) in connection with any referral of a User by Licensee
to a third party, and/or (b) the sale of any demographic, marketing or other
User-related data to any third
party. Notwithstanding the foregoing, “Advertising Revenue” shall expressly
exclude Lyric Advertising Revenue, Music Video Advertising Revenue, Non-Music
Related Advertising Revenue, and eCommerce Referral
Revenue.
1.2 An
“Affiliate”
shall
mean any corporation or other entity which directly or indirectly controls,
or
is controlled by, or is under common control with, Mohen, Inc. For purposes
of
this definition, “control” or “controlled” means ownership, directly or through
one or more Affiliates, of fifty percent (50%) or more of the shares of stock
entitled to vote for the election of directors, in the case of a corporation,
or
fifty percent (50%) or more of the equity interest in the case of any other
type
of legal entity, status as a general partner in any partnership, or any other
arrangement whereby any entity controls or has the right to control the Board
of
Directors or equivalent governing body of a corporation or other entity,
or the
ability to cause the direction of the management or policies of a corporation
or
other entity. The parties to this Agreement acknowledge that in the case
of
certain entities organized under the laws of certain countries, the maximum
percentage ownership permitted by law for an investor is less than fifty
percent
(50%), and that in such case such lower percentage shall be substituted in
the
preceding sentence, PROVIDED THAT such investor otherwise has the power,
directly or indirectly, to direct the management and policies of such
entity.
1.3 An
“A/V
Master Recording”
shall
mean a music video licensed (or otherwise supplied) by a Major Record Label
to
promote a Master Recording and that embodies such Master Recording.
1.4 A
“Composition”
shall
mean a copyrighted, non-dramatic musical composition. For the avoidance of
doubt, Compositions shall not include sound recordings of musical
compositions.
1.5 A
“Covered
Device”
shall
mean (a) a Personal Computer located in the Territory that supports DRM and
is
able to receive Digital Files and display Lyric Files via the Internet or
(b) a
Portable Digital Music Device that supports DRM and is able to receive Digital
Files and display Lyric Files via a Personal Computer; provided, however,
that
each User shall only be authorized to access Limited Downloads, On-Demand
Streams, Limited Video Downloads, On-Demand Video Streams and Lyric Displays
through the Service on, and for each User Covered Devices shall only include,
the lesser of either (x) three (3) Personal Computers and two (2) Portable
Digital Music Devices or (y) the least amount of Personal Computers or Portable
Digital Music Devices, as applicable, permitted by any licensor with respect
to
a User’s access to sound recordings in connection with the Service.
Notwithstanding the foregoing, in all events, the Service shall limit the
number
of Portable Digital Music Devices allowed to receive Digital Files and display
Lyric Files to two.
1.6 A
“Digital
File”
shall
mean a single digital copy of a Master Recording or A/V Master Recording,
as the
case may be.
1.7 “DRM”
shall
mean digital rights management technology that imposes effective, secured
controls over the use of a Composition (and/or the Lyrics of a Composition,
as
the case may be) and any Master Recordings embodying such Composition consistent
with industry best practices, and shall include without limitation the Security
Systems set forth in paragraph 10.1 hereof.
1.8 “eCommerce
Referral Revenue”
shall
mean any referral fees received by Licensee, during the Term, from third-parties
for "click-throughs” or referrals from advertisements or links on those pages of
the Service that do not offer, sell, make available, link to, display,
reproduce, transmit, distribute, refer to and/or otherwise exploit any
Composition, Master Recording, A/V Master Recording, Limited Download, On-Demand
Stream, Limited Video Download, On Demand Video Stream, Lyric Display, or
the
Lyric Search Service, that result in actual sale(s) to User(s) of non-music
related products or services (that is, products or services that do not embody
or in any way exploit any Composition(s)).
1.9 An
“EMI-Authorized
Record Label”
shall
mean a record label that is, at the time Licensee seeks a license to reproduce
and distribute Relevant A/V Master Recordings embodied in Digital Files as
Limited Video Downloads and/or On-Demand Video Streams, authorized by EMI,
pursuant to a New Digital Media Agreement with EMI, to act as EMI’s agent for
the purpose of issuing such a license.
1.10 An
“EMI
Composition”
shall
mean a musical composition in which the rights which are the subject of this
Agreement are owned or controlled by, or licensed to, EMI, in whole or in
part,
in the Territory, and which are available, to the extent of EMI’s ownership or
control thereof, and to the extent of its rights, for the purposes described
herein, subject to any restrictions or limitations thereon imposed pursuant
to
songwriter agreements or otherwise. With respect to any such musical composition
which may be owned or controlled by EMI only in part, the term “EMI Composition”
shall only refer to that portion of the musical composition controlled by
EMI.
Licensee acknowledges that EMI may, in the normal course of business, and
otherwise, lose rights with respect to musical compositions, in which event
such
compositions may cease to be EMI Compositions hereunder, and EMI shall have
no
liability to Licensee with respect to the unavailability of such musical
compositions.
1.11 “Gross
Lyrics Revenue”
shall
mean all amounts, fees, or other consideration received by, or paid or credited
in any way to, Licensee (or any entity acting on its behalf), and not returned
by Licensee, during the Term, from (i) Users, and (ii) from any other entity
(including, without limitation, advertisers), in connection with or relating
to
the exploitation of Lyrics (including, without limitation, in connection
with
the Lyric Search Service and/or as Lyric Displays). For the avoidance of
doubt,
Gross Lyrics Revenue shall include all Lyric Advertising Revenue, but shall
not
include eCommerce Referral Revenue.
1.12 “Gross
Music Video Revenue”
shall
mean all amounts, fees, or other consideration received by, or paid or credited
in any way to, Licensee (or any entity acting
on
its behalf), and not returned by Licensee, during the Term, from (i) Users,
and
(ii) from any other entity (including without limitation, advertisers), in
connection with or relating to the exploitation of A/V Master Recordings
and
other music videos (including, without limitation, in connection with Limited
Video Downloads and On-Demand Video Streams). For the avoidance of doubt,
Gross
Music Video Revenue shall include all Music Video Advertising Revenue, but
shall
not include eCommerce Referral Revenue.
1.13 “Gross
Revenue”
shall
mean all amounts, fees, or other consideration received by, or paid or credited
in any way to, Licensee (or any entity acting on its behalf), and not returned
by Licensee, during the Term, from (i) Users, and (ii) from any other entity
(including, without limitation, advertisers), in connection with or relating
to
the Service and/or exploitation via the Service of Master Recordings and
the
Compositions embodied therein (including, without limitation, in connection
with
the exploitation of Master Recordings in Limited Downloads and On-Demand
Streams). For the avoidance of doubt, Gross Revenue shall include all
Advertising Revenue, but shall not include Gross Lyrics Revenue, Gross Music
Video Revenue, or eCommerce Referral Revenue.
1.14 “Licensee”
shall
mean, individually and collectively, Mohen, Inc. and each of its
Affiliates.
1.15 A
“Limited
Download”
shall
mean an encrypted digital transmission of a time-limited or other use-limited
download of a Digital File embodying a Master Recording, which is delivered
via
the Service from a Secured Server(s) to the Covered Device of a User in
accordance with the terms and conditions of such User’s agreement with Licensee
and is only available to such User through such Covered Device for a limited
period of time in accordance with the terms of this Agreement.
1.16 A
“Limited
Video Download”
shall
mean an encrypted digital transmission of a time-limited or other use-limited
download of a Digital File embodying an A/V Master Recording, which is delivered
via the Service from a Secured Server(s) to the Covered Device of a User
in
accordance with the terms and conditions of such User’s agreement with Licensee
and is only available to such User through such Covered Device for a limited
period of time in accordance with the terms of this Agreement. AV Limited
Video
Downloads shall appear with an easy interface to purchase a permanent copy
of
the A/V Master Recording embodied therein in digital or physical format,
through
the use of a “Buy Button” or other similar device. For the avoidance of doubt,
it is understood and agreed that no rights are granted herein by EMI with
respect to the exploitation of any EMI Compositions in Limited Video Downloads,
and that Licensee will be obtaining from EMI-Authorized Record Labels, acting
as
EMI’s agents, licenses to reproduce and distribute Relevant A/V Master
Recordings embodied in Digital Files as Limited Video Downloads. With respect
to
the exploitation by Licensee of any Limited Video Downloads that embody Relevant
A/V Master Recordings as to which Licensee cannot obtain a license from an
EMI-Authorized Record Label acting as EMI’s agent to issue licenses pursuant to
a New Digital Media Agreement, Licensee and EMI will negotiate in good faith
the
terms of a license
to exploit EMI Compositions in Limited Video Downloads embodying such Relevant
A/V Master Recordings.
1.17 “Lyrics”
shall
mean the words of a Composition, generally composed of verse and
chorus.
1.18 A
“Lyric
Display”
shall
mean a display of a Lyric File via the Service to a User’s Covered Device,
solely for display on such Covered Device as a single, static image of the
entirety of the Lyrics embodied therein, in a separate browser window (without
downloading). For the avoidance of doubt, and without limiting the foregoing,
Lyrics may not be synchronized with any sound recording, and no “bouncing ball”
or other karaoke or similar use is permitted hereunder. In addition, and
without
limiting the foregoing, in connection with transmitting Lyric Displays, Licensee
shall disable all “print”, “copy”, “paste”, “cut”, “view source”, and “save as”
functionalities, and any “right click” functionalities, that might otherwise be
available to a User viewing a Lyric Display, including through any web browser
or other application used to access or view Lyric Files. This requirement
shall
also include, to the extent possible, disabling any “print screen” functionality
that may be available as part of applicable operating system(s) through which
the User may access the Service and Lyric Displays. Wherever commercially
possible, Licensee shall create other possibilities of a referral or “buy
button” to allow the User to purchase an authorized copy of the
Lyrics.
1.19 “Lyric
Advertising Revenue”
shall
mean all amounts, fees, or other consideration received by, or paid or credited
in any way to, Licensee (or any entity acting on its behalf), and not returned
by Licensee, during the Term, in consideration of the placement and/or
distribution of advertisements, promotions, and/or sponsorships on those
pages
of the Service where Lyrics can be searched for via the Lyric Search Service
and/or displayed as Lyric Displays.
1.20 A
“Lyric
File”
shall
mean a digital file embodying the complete Lyrics of a particular Composition,
which Lyrics have been rendered into text and electronically
stored.
1.21 The
“Lyric
Search Service”
shall
mean a service operated by Licensee as part of the Service that will permit
Users to use keyword inquiries to search for Lyrics in a database of Lyric
Files
created by Licensee, and to display the results of such searches as Lyric
Displays.
1.22 A
“Major
Record Label”
shall
mean any record label owned or owned by SonyBMG Music Entertainment, UMG
Recordings, Inc., Warner Music, Inc., or EMI Music North America.
1.23 A
“Master
Recording”
shall
mean a complete, authorized, audio-only master sound recording that is or
was
distributed by any record label and that is licensed to Licensee for
exploitation by Licensee via the Service.
1.24 “Music-Related
eCommerce Referral Revenue”
shall
mean any referral fees received by Licensee, during the Term, from
third-parties, in connection with the sale by such third-parties to Users
of
permanent downloads or physical copies (e.g., CDs, Dual Discs or DVDs) of
sound
recordings or audiovisual works embodying Composition(s) as to which the
owner(s) and/or administrator(s) of the copyrights in the Composition(s)
have
otherwise been or will otherwise be paid mechanical and/or synchronization
royalties. For the avoidance of doubt, it is understood and agreed that no
rights are granted herein to offer, sell, reproduce, display, transmit,
distribute or otherwise exploit any EMI Compositions via the Service in any
manner, or embodied in any content, product, or audiovisual work (including
in
any permanent download, or any physical copy), other than as embodied in
Limited
Downloads, On-Demand Streams, and/or Lyric Displays, and other than to provide
the Lyric Search Service.
1.25 “Music
Video Advertising Revenue”
shall
mean all amounts, fees, or other consideration received by, or paid or credited
in any way to, Licensee (or any entity acting on its behalf) and not returned
by
Licensee, during the Term, in consideration of the placement and/or distribution
of advertisements, promotions, and/or sponsorships on those pages of the
Service
where A/V Master Recordings can be searched for and/or are offered, sold,
reproduced, displayed, transmitted, distributed and/or otherwise exploited
as
Limited Video Downloads or On-Demand Video Streams.
1.26 “Non-Music
Related Advertising Revenue” shall
mean amounts or other consideration received by, or paid or credited in any
way
to, Licensee (or any entity acting on its behalf), and not returned by Licensee,
during the Term, in consideration of the placement and/or distribution of
advertisements, promotions, and/or sponsorships on those pages of the Service
that do not offer, sell, make available, link to, display, reproduce, transmit,
distribute, refer to and/or otherwise exploit any Composition, Master Recording,
A/V Master Recording, Limited Download, On-Demand Stream, Limited Video
Download, On Demand Video Stream, Lyric Display, or the Lyric Search
Service.
1.27 An
“On-Demand
Stream”
shall
mean an encrypted digital transmission of a Digital File of a Master Recording
from Secured Servers via the Service that allows a User to receive and listen
to
the particular Master Recording upon request at a time chosen by the User
using
streaming technology (including, without limitation, via Real Networks’
RealAudio or Microsoft’s Windows Media Audio formats) through the Users Covered
Device, which transmission is (a) configured by the provider of the Service
such
that the transmission will not result in a substantially complete reproduction
of such Master Recording other than a copy used solely for caching or buffering
and (b) either contemporaneous or substantially contemporaneous with the
play of
the Master Recording embodied therein.
1.28 An
“On-Demand
Video Stream”
shall
mean an encrypted digital transmission of a Digital File embodying an A/V
Master
Recording from Secured Servers via the Service that allows a User to receive
and
listen to the particular A/V Master Recording upon request at a time chosen
by
the User using streaming technology
(including, without limitation, via Real Networks’ RealAudio or Microsoft’s
Windows Media Audio formats) through the User’s Covered Device, which
transmission is (a) configured by the provider of the Service such that the
transmission will not result in a substantially complete reproduction of
such
A/V Master Recording other than a copy used solely for caching or buffering
and
(b) either contemporaneous or substantially contemporaneous with the play
of the
A/V Master Recording embodied therein. All On-Demand Video Streams shall
appear
with an easy interface to
1.29 A
“Personal
Computer”
shall
mean an Internet Protocol (IP)-enabled desktop or notebook
computer.
1.30 A
“Portable
Digital Music Device”
shall
mean a portable digital music device (including mobile devices that may also
operate on a wireless communications network regulated by the U.S. Federal
Communications Commission) that is used for the storage and play/playback
of
digital music files (i.e.,
music
files encoded in MP3, AAC, WMA or similar audio format).
1.31 A
“Relevant
A/V Master Recording”
shall
mean an A/V Master Recording that embodies a Relevant Master
Recording.
1.32 A
“Relevant
Lyric File”
shall
mean a Lyric File embodying the complete Lyrics of an EMI
Composition.
1.33 A
“Relevant
Master Recording”
shall
mean a Master Recording that embodies a complete EMI Composition.
1.34 A
“Secured
Server”
shall
mean a secured server that is (a) located in the Territory, (b) owned and
operated by Licensee and (c) continuously protected by means of (i) physical
security that meets or exceeds the prevailing physical security best practices
in the industry and (ii) firewall and other digital security technology that
meets or exceeds the prevailing digital security technology best practices
in
the industry.
1.35 “Security
Systems”
shall
have the meaning set forth in paragraph 11.1 hereof.
1.36 The“Service”
shall
mean the online service owned and operated by Licensee, as described more
fully
in Exhibit
A
hereto
(hereby incorporated herein by this reference), which offers to Users Limited
Downloads, On-Demand Streams, Limited Video Downloads, On-Demand Video Streams
and/or Lyric Displays that are transmitted from Secured Servers to the Covered
Devices of Users in accordance with the terms and conditions of this Agreement.
The Service shall also include and incorporate the Lyric Search Service.
While
EMI acknowledges that the Service may also distribute or provide content
or
products other than the products referenced in the preceding two sentences
(e.g., it may also distribute or provide film clips other than A/V Master
Recordings, or video games), no rights are granted herein or hereby to exploit
any EMI Compositions via the Service in any manner, or embodied in any content,
product, or audiovisual work, other than as embodied in Limited Downloads,
On-Demand Streams and/or Lyric Displays, and other than to provide the Lyric
Search Service. Moreover, and for the avoidance of doubt, it is understood
and
agreed that no rights are granted herein by EMI with respect to the exploitation
of any EMI Compositions in Limited Video Downloads or On-Demand Video Streams,
and that Licensee will be obtaining from EMI-Authorized Record Labels, acting
as
EMI’s agents, licenses to reproduce and distribute Relevant A/V Master
Recordings embodied in Digital Files as Limited Video Downloads and/or On-Demand
Video Streams. With respect to the exploitation by Licensee of any Limited
Video
Downloads and/or On-Demand Video Streams that embody Relevant A/V Master
Recordings as to which Licensee cannot obtain a license from an EMI-Authorized
Record Label acting as EMI’s agent to issue licenses pursuant to a New Digital
Media Agreement, Licensee and EMI will negotiate in good faith the terms
of a
license to exploit EMI Compositions in Limited Video Downloads and/or On-Demand
Video Streams embodying such Relevant A/V Master Recordings.
1.37 A
“User”
shall
mean any individual who resides within the Territory who (a) is a registered
user of the Service in good standing and (b) is authorized by Licensee to
access
Limited Downloads, On-Demand Streams, Limited Video Downloads, On-Demand
Video
Streams and Lyric Displays via the Service, and to use the Lyric Search Service,
in all cases solely for personal, non-commercial use.
1.38 “Term”
shall
have the meaning set forth in paragraph 9 hereof.
1.39 The
“Territory”
shall
mean (a) the United States for all audio uses (i.e., Limited Downloads and
On-Demand Streams embodying Relevant Master Recordings), and (b) the World
for
the Lyric Search Service and Lyric Displays, except that, with respect to
the
Lyric Search Service and Lyric Displays, EMI is licensing only Anglo-U.S.
repertoire for worldwide exploitation by Licensee in accordance with the
terms
herein.
2. Grant
of Rights.
Subject
to the terms and conditions of this Agreement, EMI hereby grants to Licensee
the
nonexclusive, non-transferable, non-sub-licensable license, solely during
the
Term and solely within the Territory, and solely in accordance with the terms
and conditions set forth in this Agreement to:
(a) reproduce
Relevant Master Recordings as Digital Files on Secured Servers;
(b) reproduce
and distribute Relevant Master Recordings embodied in Digital Files as Limited
Downloads and On-Demand Streams;
(c) reproduce
Relevant Lyric Files in a searchable database of Lyric Files on Secured Servers,
solely in connection with the Lyric Search Service;
(d) permit
Users to use keyword inquiries to search for Relevant Lyric Files in such
searchable database of Lyric Files on Secured Servers, solely in connection
with
the Lyric Search Service; and
(e) reproduce
and distribute Relevant Lyric Files as Lyric Displays (collectively, the
“Licenses”).
3. Limitations
on Grant of Rights.
3.1 The
Licenses issued hereunder are strictly limited to the use of EMI Compositions
or
the Lyrics of EMI Compositions, as the case may be, in the manner expressly
set
forth in the Agreement. Any and all other rights held by EMI that are not
specifically covered hereunder are reserved by EMI (and all other rights
held by
third parties are expressly excluded from the Licenses), including, without
limitation:
(a) any
right
of public performance;
(b) any
copyrights or other rights in sound recordings, including any sound recordings
embodied in any Digital File;
(c) any
digital video rights, including the right to offer, sell, reproduce, display,
transmit, distribute or otherwise exploit any EMI Compositions in Limited
Video
Downloads or On-Demand Video Streams (it being understood that Licensee will
be
obtaining from EMI-Authorized Record Labels, acting as EMI’s agents, licenses to
reproduce and distribute Relevant A/V Master Recordings embodied in Digital
Files as Limited Video Downloads and/or On-Demand Video Streams, and it being
further understood that, with respect to the exploitation by Licensee of
any
Limited Video Downloads and/or On-Demand Video Streams that embody Relevant
A/V
Master Recordings as to which Licensee cannot obtain a license from an
EMI-Authorized Record Label acting as EMI’s agent to issue licenses pursuant to
a New Digital Media Agreement, Licensee and EMI will negotiate in good faith
the
terms of a license to exploit EMI Compositions in Limited Video Downloads
and/or
On-Demand Video Streams embodying such Relevant A/V Master
Recordings);
(d) any
print, display or karaoke rights (other than the limited rights specifically
granted herein in connection with the Lyric Search Service);
(e) any
right
to use, exploit, or permit the use of exploitation of any EMI Composition
or the
Lyrics of any EMI Composition in a video game;
(f) any
right
to use, exploit, or permit the use of. exploitation of any EMI Composition
or
the Lyrics of any EMI Composition as a ringtone, ringback tone, or other
so-called “telecommunication personalization product”;
(g) any
adaptation (derivative work) rights or right to alter the fundamental character
of an EMI Composition or the Lyrics of an EMI Composition, to excerpt or
use
only a portion of any EMI Composition (other then solely the Lyrics of EMI
Compositions, to the extent permitted herein) or a portion of the Lyrics
of any
EMI Composition, or to create any derivative work based in whole or in part
on
an EMI Composition or the Lyrics of an EMI Composition;
(h) any
merchandising rights;
(i) any
use
of an EMI Composition or the Lyrics of an EMI Composition for a marketing
campaign, product tie-in, game or contest, or otherwise to advertise, promote
or
cross-promote any product or service;
(j) any
right
to permit downloads of Relevant Master Recordings or Relevant A/V Master
Recordings (or Digital Files embodying the same), or Relevant Lyric Files,
on a
permanent basis (including any right to make any permanent digital phonorecord
delivery);
(k) any
use
of the title of an EMI Composition, or the name or likeness of any writer
or
publisher of an EMI Composition, except solely as necessary to identify the
EMI
Composition to Users as part of (and not to promote) the Service or as otherwise
required hereunder.
3.2 Notwithstanding
anything in this Agreement to the contrary, ownership and control of any
EMI
Composition embodied in any Digital File shall remain with EMI, and neither
Licensee nor any User or other third party shall obtain any ownership rights
in
any work derived from or that makes use of the EMI Composition, including,
without limitation, Digital Files.
3.3 Notwithstanding
anything in this Agreement to the contrary, any and all uses of Compositions
by
Licensee or any User (apart from use of EMI Compositions as part of authorized
Digital Files embodying Relevant Master Recordings or Lyric Files embodying
Lyrics of EMI Compositions created hereunder in accordance with the license
authority and other terms and conditions hereof) shall require separate licenses
from the relevant owners of any applicable copyrights or other rights, and
Licensee agrees to obtain, at its own expense, appropriate licenses in advance
for any other such uses. For the avoidance of doubt, Licensee shall be solely
responsible for paying any share of royalties due to the relevant owners
of any
applicable copyrights or other rights with
respect to any Compositions and/or Digital Files or Lyric Files to the extent
not represented by EMI under this Agreement. Without limiting the foregoing,
no
musical composition owned or controlled by, or licensed to, EMI, in whole
or in
part (whether embodied in Digital Files, Lyric Files or otherwise) shall
be
exploited in, on or via the Service along with or in connection with any
content
the rights to which have not been cleared and/or that infringes upon the
rights
of EMI or any third-party and/or is libelous, defamatory and/or
scandalous.
3.4 The
license authority contemplated by this Agreement and issued pursuant to any
License issued hereunder is limited to Licensee and may not be sublicensed,
assigned or otherwise transferred by Licensee.
3.5 Licensee
shall neither cause nor allow any third party to cause any particular
advertisement, sponsorship or other commercial message (“Advertisement”):
(a) to
appear in response to, or otherwise to be associated with, a user’s selection
of, search for, playback of or access to any particular EMI Composition
(including any sound recording or music video embodying any EMI Composition),
the Lyrics of any EMI Composition, or any Digital File or Lyric File, except
to
the extent such Advertisement directly and solely promotes the sale of a
particular Relevant Master Recording or Relevant A/V Master Recording being
played or accessed by such user at the time the Advertisement appears; (b)
to
appear in response to, or otherwise to be associated with, a user’s selection of
or search for any particular writer, artist or publisher; (c) to suggest
or
imply in any way that EMI or any EMI Composition, Digital File, Lyric File,
writer, or artist is associated with or endorsing such Advertisement or any
other Advertisement, product or service; or (d) to suggest or imply that
the
Advertisement is part of or integrated into any EMI Composition, Digital
File or
Lyric File (the foregoing, collectively, “Prohibited
Endorsements”).
For
clarity, Licensee may present advertisements during the User’s selection, search
or playback of any Digital File or the display of any Lyric File, provided
no
such advertisements are selected or played based upon the particular writer,
artist, Digital File or Lyric File selected.
4. Licensing
Methodology.
4.1 The
rights granted hereunder shall apply solely to EMI Compositions included
on the
Approved Compositions List (defined below). The“Approved
Compositions List”
shall
mean the list of the EMI Compositions that EMI has cleared for exploitation
in
accordance with this Agreement by Licensee. The most current version of the
Approved Compositions List as of the Effective Date is annexed hereto as
Schedule A. Licensee shall, from time to time, provide EMI with written notice
of additional EMI Compositions it desires to add to the Approved Compositions
List, and the same shall be so added if, in EMI’s sole but reasonable
discretion, all relevant approvals have been obtained. For the avoidance
of
doubt, neither Licensee nor anyone acting on Licensee’ behalf shall exploit any
EMI Composition that is not on the Approved Compositions List. Also for the
avoidance of doubt, if a composition ceases to be an “EMI Composition” for any
reason after Licensee has begun exploiting such EMI Composition in accordance
with the terms of this Agreement, Licensee shall cease further
distribution of such EMI Composition promptly following receipt of written
notice by EMI that such composition is no longer an “EMI Composition” (a “Take
Down Notification”). With respect to each EMI Composition included on the
Approved Compositions List, EMI shall set forth its pro rata
share.
4.2 EMI
shall, solely to the extent that they are available, provide Licensee with
digital files of the Lyrics of EMI Compositions included on the Approved
Compositions List. EMI shall have no obligation to create any digital files
of
any Lyrics, and EMI’s failure to provide digital files of any Lyrics shall not
be deemed a breach of this Agreement.
5. Advance.
Licensee
shall pay to EMI a recoupable, non-refundable advance in the amount of one
million U.S. dollars ($1,000,000) (the “Advance”), payable as
follows:
(a) one
hundred and fifty thousand U.S. dollars ($150,000) on or before September
15,
2006;
(b) three
hundred and fifty thousand U.S. dollars ($350,000) on or before March 15,
2007;
(c) one
hundred and fifty thousand U.S. dollars ($150,000) on or before September
15,
2007; and
(d) three
hundred and fifty thousand U.S. dollars ($350,000) on or before March 15,
2008.
The
Advance shall be recoupable by Licensee solely from the Royalties described
in
paragraph 6 below. The Advance shall be non-refundable, and EMI shall have
no
obligation to return any part of the Advance, even in the event that royalties
payable to EMI for the uses hereunder do not equal or exceed the amount of
the
Advance during the Term. It is of the essence of this Agreement that the
Advances be paid to EMI in a timely manner.
6. Royalties.
6.1 Basic
Royalty.
With
respect to Licensee’ exploitation of Limited Downloads and On-Demand Streams,
Licensee shall, during each calendar quarter beginning on the earlier of
Licensee’s launch of the Service and November 15, 2006, and for every calendar
quarter thereafter (each, a “Quarterly
Accounting Period”),
pay to
EMI a royalty equal to ten percent (10%) of Gross Revenue multiplied by the
EMI
Basic Royalty Share (defined below). The “EMI
Basic Royalty Share”
shall
equal a fraction, the numerator of which shall be the sum of (a) the number
of
times all Digital Files embodying Relevant Master Recordings that have been
distributed to Users via the Service as Limited Downloads have been played
by
such Users during the relevant Quarterly Accounting Period and (b) the number
of
times all Digital Files embodying Relevant Master Recordings have been
distributed to and played by Users as On Demand
Streams during the relevant Quarterly Accounting Period (with an appropriate
adjustment made for Relevant Master Recordings that embody a partially-owned
or
partially controlled EMI Composition, by multiplying the number of plays
of each
such Relevant Master Recording by EMI’s percentage interest in the EMI
Composition embodied therein), and the denominator of which shall be the
sum of
(x) the number of times all Digital Files embodying Master Recordings that
have
been distributed to Users via the Service as Limited Downloads have been
played
by such Users during the relevant Quarterly Accounting Period and (y) the
number
of times all Digital Files embodying Master Recordings have been distributed
to
and played by Users as On-Demand Streams during the relevant Quarterly
Accounting Period.
6.2 Lyric
Search Service and Lyric Display Royalty.
With
respect to the Lyric Search Service and Licensee’ exploitation of the Lyrics of
EMI Compositions as Lyric Displays, Licensee shall, during each Quarterly
Accounting Period, pay to EMI a royalty equal to fifty percent (50%) of Gross
Lyric Revenue multiplied by the EMI Lyric Royalty Share (defined below).
The
“EMI
Lyric Royalty Share”
shall
equal a fraction, the numerator of which shall be the number of Lyrics Displays
embodying Lyrics of EMI Compositions that have been displayed to Users via
the
Service during the relevant Quarterly Accounting Period (with an appropriate
adjustment made for Lyric Displays that embody a partially-owned or partially
controlled EMI Composition, by multiplying the number of displays of each
such
Lyric Display by EMI’s percentage interest in the EMI Composition embodied
therein), and the denominator of which shall be the total number of Lyric
Displays that have been displayed to Users via the Service during the relevant
Quarterly Accounting Period.
6.3 Incremental
Video Advertising Royalty.
It is
understood and agreed that no rights are granted herein by EMI with respect
to
the exploitation of any EMI Compositions in Limited Video Downloads or On-Demand
Video Streams, and that Licensee will be obtaining from EMI Authorized Record
Labels, acting as EMI’s agents, licenses to reproduce and distribute Relevant
A/V Master Recordings embodied in Digital Files as Limited Video Downloads
and/or On-Demand Video Streams. With respect to the exploitation by Licensee
of
any Limited Video Downloads and/or On-Demand Video Streams that embody Relevant
A/V Master Recordings as to which Licensee cannot obtain a license from an
EMI-Authorized Record Label acting as EMI’s agent to issue licenses pursuant to
a New Digital Media Agreement, Licensee and EMI will negotiate in good faith
the
terms of a license to exploit EMI Compositions in Limited Video Downloads
and/or
On-Demand Video Streams embodying such Relevant A/V Master Recordings.
Notwithstanding the foregoing, in addition to and notwithstanding the royalties
that Licensee shall pay to EMI-Authorized Record Labels acting as EMI’s agent
for licenses to reproduce and distribute Relevant A/V Master Recordings embodied
in Digital Files as Limited Video Downloads or On-Demand Video Streams, during
each Quarterly Accounting Period, Licensee shall also pay to EMI an additional,
incremental royalty equal to five percent (5%) of Gross Music Video Revenue
multiplied by the EMI Video Royalty Share (defined below). The “EMI Video
Royalty Share” shall equal a fraction, the numerator of which shall be the sum
of (a) the number of times all Digital Files embodying Relevant A/V Master
Recordings that have been distributed to Users
via
the
6.4 Fixation
Fee.
In
addition to the royalties described above, Licensee shall pay to EMI a fixation
fee (the “Fixation
Fee”)
for
each Relevant Master Recording encoded as a Digital File for the purpose
of
accomplishing the distribution of Limited Download and On-Demand Streams
in the
manner described herein. Notwithstanding the foregoing, for other valuable
consideration, including the promotional commitments that Licensee shall
be
making to EMI and EMI writers in connection with the Service (including,
without
limitation, the Unsold Advertising Inventory described in paragraph 7 hereof),
and in light of EMI’s desire to support this type of Service, the particular
distribution and revenue model associated therewith, and the particular team
of
individuals associated with Licensee (although nothing in this Agreement
shall
be deemed to give EMI any right to terminate the Agreement as a result of
any
change in the team of individuals associated with Licensee), EMI shall, on
a
one-time, non-precedential basis, waive its right to receive the Fixation
Fee.
6.5 Music-Related
eCommerce Referral Revenue.
In
addition, and notwithstanding anything to the contrary contained heroin
(including in paragraphs 1.10, 1.11 and 1.12 above), for other valuable
consideration, including the promotional commitments that Licensee shall
be
making to EMI and EMI writers in connection with the Service (including,
without
limitation, the Unsold Advertising Inventory described in paragraph 7 hereof),
and in light of EMI’s desire to support this type of Service, the particular
distribution and revenue model associated therewith, and the particular team
of
individuals associated with Licensee (although nothing in this Agreement
shall
be deemed to give EMI any right to terminate the Agreement as a result of
any
change in the team of individuals associated with Licensee), EMI shall, on
a
one-time, non-precedential
basis, waive its right to receive Music-Related eCommerce Referral Revenue
(and
Music-Related eCommerce Referral Revenue shall be excluded from the definitions
of Gross Lyrics Revenue, Gross Music Video Revenue, and Gross
Revenue).
6.6 Royalty
Rates.
Licensee
further acknowledges that the royalty rates in this Agreement reflect the
promotional commitments that Licensee shall be making to EMI and EMI writers
in
connection with the Service (including, without limitation, the Unsold
Advertising Inventory described in paragraph 7 hereof), and EMI’s desire to
support this type of Service, the particular distribution and revenue model
associated therewith, and the particular team of individuals associated with
Licensee (although nothing in this Agreement shall be deemed to give EMI
any
right to terminate the Agreement as a result of any change in the team of
individuals associated with Licensee).
6.7 Licensee
acknowledges and agrees that it shall not, without EMI’s prior approval, accept
barter or other in-kind consideration in exchange for sales of advertising,
promotions and/or sponsorships on the Service (other than on web pages that
do
not offer, make available, link to, reproduce, transmit, distribute and/or
refer
to any Master Recording, A/V Master Recording, Limited Download, On-Demand
Stream, Limited Video Download, On Demand Video Stream, Lyric Display and/or
the
Lyric Search Service). In each case where EMI grants such approval, the parties
will mutually agree upon the fair market value of the in-kind consideration
for
purposes of imputing the same to Licensee’s Advertising Revenue, Lyric
Advertising Revenue, or Music Video Advertising Revenue, as the case may
be.
6.8 Licensee
acknowledges and agrees that it shall not enter into any agreement or
arrangement with any third party (including without limitation any advertiser),
or enter any agreement or arrangement with or make any sale or offer to any
User(s), the effect or intent of which is to minimize or reduce the amounts
that
would otherwise constitute Gross Revenue, Gross Lyrics Revenue, or Gross
Music
Video Revenue, or any other amount paid or payable to EMI hereunder (a) in
return for increasing the amounts that constitute eCommerce Referral Revenue,
Music-Related eCommerce Referral Revenue, Non-Music Related Advertising Revenue,
or other such consideration, or (b) in exchange for any other financial or
promotional benefit to Licensee. For the avoidance of doubt, and without
limitation, Licensee shall not unfairly diminish the value of any Composition,
Master Recording, A/V Master Recording, Limited Download, On-Demand Stream,
Limited Video Download, On Demand Video Stream,. Lyric, Lyric File, Lyric
Download, or the Lyric Search Service, e.g., by (a) offering a reduced rate
for
advertisements, sponsorships or the like on pages that make available, link
to,
reproduce, transmit, distribute, or refer to any of the same, while increasing
the rate for advertisements, sponsorships or the like on pages that do not
make
available, link to, reproduce, transmit, distribute, or refer to any of the
same, (b) reducing the price or value of any of the same so as to make it
a
“loss leader” to encourage the purchase of other products or services, and/or
(c) bundling any of the same
with
another product or service and increasing the price or value of the bundled
product or service while reducing the price or value of any or all of the
same.
6.9 It
is of
the essence of this Agreement that all royalties and other consideration
described in this paragraph 6 be paid by to EMI in a timely manner.
7. Unsold
Advertising Inventory.
In
addition to the Advance set forth in paragraph 5 above, and the Royalties
set
forth in paragraph 6 above, Licensee shall provide to EMI, and EMI shall
be
entitled to use, a pro-rata share of six percent (6%) of Licensee’s unsold
advertising inventory, which EMI may use to promote its writers and publishing
companies that it owns, controls or administers. EMI’s pro
rata
share
shall be determined by using the fraction used in calculating the EMI Basic
Royalty Share during the preceding quarter.
8. Accounting.
8.1 Within
sixty (60) days after the end of each applicable Quarterly Accounting Period,
Licensee shall pay to EMI all royalties applicable for that period, and shall
account to EMI in a manner such that EMI may pay its writers, including by
providing electronic statements (“Statements”)
indicating:
(a) Gross
Revenue, Gross Music Video Revenue, Gross Lyric Revenue, Advertising Revenue,
Video Advertising Revenue, Lyric Advertising Revenue, Non-Music Related
Advertising Revenue, eCommerce Referral Revenue, and Music-Related eCommerce
Referral Revenue for the relevant Quarterly Accounting Period, and all financial
and other relevant data supporting the calculations of Gross Revenue, Gross
Music Video Revenue, Gross Lyric Revenue, Advertising Revenue, Music Video
Advertising Revenue, Lyric Advertising Revenue, Non-Music Related Advertising
Revenue, eCommerce Referral Revenue, and Music-Related eCommerce Referral
Revenue;
(b) the
particular Relevant Master Recordings distributed to Users via the Service
as
Limited Downloads, the number of times each such Relevant Master Recording
has
been played by Users as a Limited Download, and the total number of times
each
Master Recording distributed to Users via the Service as a Limited Download
has
been played by Users as a Limited Download;
(c) the
particular Relevant Master Recordings distributed to Users via the Service
as
On-Demand Streams, the number of times each such Relevant Master Recording
has
been played by Users as an On-Demand Stream, and the total number of times
each
Master Recording distributed to Users via the Service as an On-Demand Stream
has
been played by Users as an On-Demand Stream;
(d) the
particular Relevant A/V Master Recordings distributed to Users via the Service
as Limited Video Downloads, the number of times each such Relevant A/V Master
Recording has been played by Users as a Limited Video Download, and the total
number of times each A/V Master Recording distributed to Users via the Service
as a Limited Video Download has been played by Users as a Limited Video
Download;
(e) the
particular Relevant A/V Master Recordings distributed to Users via the Service
as On-Demand Video Streams, the number of times each such Relevant A/V Master
Recording has been played by Users as an On-Demand Video Stream, and the
total
number of times each A/V Master Recording distributed to Users via the Service
as an On-Demand Video Stream has been played by Users as an On-Demand Video
Stream;
(f)
the
particular EMI Compositions the Lyrics of which have been displayed as Lyric
Displays, the number of times the Lyrics of each such EMI Composition has
been
displayed to Users as Lyric Displays, and the total number of times each
Lyric
displayed to Users via the Service as a Lyric Display has been displayed
to
Users as a Lyric Display.
8.2 The
first
payment and quarterly accounting statement(s) shall include payment and an
accounting for any exploitation(s) licensed hereunder occurring prior to
the
execution of the Agreement.
8.3 All
statements rendered by Licensee shall be incontestable within three years
of the
date due, unless an objection in writing is made for each such statement.
Any
objection must specify, with particularity, the reason for such objection,
and
if an audit is to be conducted with respect to such statement, it must be
conducted within three years of the issuance of such statement. Any action
brought in connection with such audit shall be brought within two years of
the
date of the commencement of any such audit.
9. Term.
The term
of this Agreement shall commence as of the Effective Date, and unless earlier
terminated in accordance with the terms of paragraph 13 hereof, shall continue
for two years to March 31, 2008 (the “Initial
Term”).
The
Agreement shall thereafter be automatically extended for an additional nine
month period, to December 31, 2008 (the “Extension
Period”).
The
“Term”
shall
mean, collectively, the Initial Term and the Extension Period,
10. Security.
10.1 In
connection with any use of EMI Composition and/or the Lyrics of any EMI
Composition, Licensee shall implement and maintain copy protection and DRM
technology and systems, consistent with industry best practices, including
software and/or hardware functional limitations (collectively, “Security
Systems”)
with
respect to all aspects of the Service under its supervision and/or control,
including, without limitation, Secured Servers and operating systems, that:
(a)
are designed to prevent unauthorized reproduction and distribution of EMI
Compositions and/or the Lyrics of EMI Compositions, whether in the form of
Digital Files or otherwise; (b) encrypt Digital Files and Lyric Files throughout
the entire distribution chain (i.e., Secured Server to User’s
Covered Device hard drive or other permitted device) with the then-most-current
version of Microsoft’s Windows Media DRM technology or a substantially
equivalent DRM technology accepted within the industry; (c) are sufficient
to
track and enforce the use and other license limitations contemplated by this
Agreement; and (d) generally meet or exceed then-current best practices within
the industry for the licensed delivery of music via digital transmission
and its
reproduction on approved devices, and/or the licensed display of lyrics on
approved devices, as the case may be.
10.2 To
the
extent Licensee employs third-party technology in order to operate the Service,
Licensee shall continually maintain, upgrade, and employ the version of such
technology which is generally consistent with industry best practices, including
by (a) diligently monitoring applicable third-party notifications of bug-fixes,
security holes and functionality improvements; and (b) obtaining, installing,
and testing any available upgrades and bug-fixes that could help maintain
the
integrity of Licensee’ Security Systems.
11. Royalty
and Security Compliance.
11.1 In
order
to determine whether Licensee is in compliance with its obligations under
this
Agreement, including whether it is accounting to EMI on an accurate and timely
basis (and whether Licensee’ calculations of Gross Revenue, Gross Video Revenue,
Gross Lyric Revenue, Advertising Revenue, Video Advertising Revenue, Lyric
Advertising Revenue, Non-Music Related Advertising Revenue, eCommerce Referral
Revenue, and Music-Related eCommerce Referral Revenue are correct), EMI .shall
be entitled, upon thirty (30) business days’ notice to Licensee, to conduct or
have a third party conduct an examination (a “Compliance
Examination”)
of the
books, records, operations and Security Systems of Licensee with respect
to all
exploitations covered by this Agreement and the calculations of Gross Revenue,
Gross Video Revenue, Gross Lyric Revenue, Advertising Revenue, Video Advertising
Revenue, Lyric Advertising Revenue, Non-Music Related Advertising Revenue,
eCommerce Referral Revenue, and Music-Related eCommerce Referral Revenue,
and to
make copies and extracts thereof. Licensee shall cooperate with EMI and/or
EMI’s
designated representative to assist EMI and/or such representative in conducting
such Compliance Examination and in understanding and making copies of all
such
material. Absent a good-faith basis to believe that Licensee is not in
compliance with such obligations, EMI shall not seek to initiate a Compliance
Examination of Licensee more frequently than once every twelve (12)
months.
11.2 As
part
of any Compliance Examination, upon request by EMI or an examiner acting
on its
behalf (an “Examiner”),
Licensee shall upon at least thirty (30) days written notice from
EMI:
(a) provide
access to any relevant information that may be the subject of such request,
including without limitation any (i) books, records, files, logs, reports,
compilations, usage data and other documentation, whether in paper or electronic
form, that were or could be used or required to generate or verify Licensee’
Statements and/or that reflect or summarize Licensee’ Statements; (ii) copies of
all agreements with third-parties, including without limitation, advertisers,
that relate to the Service or any advertising, promotion, referral agreement,
or
sponsorship on the Service or in connection therewith, (iii) relevant financial
information, including books, records, ledgers, reports, and other
documentation, reflecting cash receipts and general revenue accounts to the
extent such information relates directly or indirectly to the activities
licensed under this Agreement; (iv) files, logs, reports, compilations, testing
and monitoring data and other documentation related to and/or reflecting
the
operation and integrity of Licensee’ Security Systems (such information,
collectively with the items described in subsections (a)(i), (a)(ii) and
(a)(iii) of this paragraph 11.2, “Documentation”);
and
(v) software, hardware or other technology used by Licensee in providing
or
maintaining the Service or supporting the provision of the
Service;
(b) make
available to EMI or any Examiner personnel who are familiar with the technical
and operational aspects of Licensee’ computer, hardware, software, and Security
Systems (collectively, “Operational Systems”); and
(c) with
the
assistance of such personnel, provide EMI or any Examiner with real-time
and
historical access to the Operational Systems, sufficient to permit EMI or
such
Examiner(s) to conduct meaningful tests and analysis to verify that the
Operational Systems are (i) properly and accurately tracking and reporting
the
use of the Licensed Works, as contemplated by the terms of this Agreement
and
(ii) in compliance with the security requirements set forth in paragraph
10 of
this Agreement.
Licensee
shall provide the information, systems access and personnel required by this
paragraph 11.2 at no expense to EMI and, unless otherwise requested by EMI
or
its Examiner(s), at Licensee’ place of business. All such tests and evaluations
of the Operational Systems shall be done no more frequently than once in
each
calendar year. In the event that any agreement referred to in subparagraph
11.2(a)(ii) above contains confidential information, Licensee may redact
such
confidential information prior to providing the agreement to EMI, provided
however that, at EMI’s request, Licensee shall provide a sworn affidavit
summarizing the material terms of the redacted portions of such
agreement.
11.3 Licensee
shall maintain, and shall make available to EMI in accordance with this
paragraph 11, any and all Documentation that reasonably might be expected
to be
relevant to EMI in conducting a Compliance Examination, for a period of at
least
three (3) years following the expiration or termination of this Agreement,
unless there is a Compliance Examination in progress or not fully resolved
as of
the expiration of such period, in which case the Documentation shall be
maintained until such Compliance Examination is fully resolved to the
satisfaction of EMI.
11.4 If
a
Compliance Examination reveals a nonpayment or underpayment of royalties
or
other fees due to EMI, the amounts determined to be owing shall be subject
to
interest equal to the lesser of (a) prime or (b) the highest rate permitted
by
applicable law, calculated from the date the applicable fees were due and
payable to the date of EMI’s
receipt of payment in full therefore. In the event a Compliance Examination
reveals an underpayment of royalties or other fees due to EMI of five percent
(5%) or greater for any individual Quarterly Accounting Period, Licensee
shall
reimburse EMI for the out-of-pocket costs of such Compliance
Examination.
12. Representations
and Warranties: Indemnity.
12.1 Licensee
represents and warrants that: (a) it has the full right, power and authority
to
enter into and perform this Agreement in accordance with its terms and
conditions; (b) It shall take all steps necessary to implement and shall
comply
with its security obligations set forth in paragraph 10; (c) it shall obtain
from the relevant owners, at its own expense, any rights not granted hereunder
that are necessary to convert EMI Compositions to Digital Files or to use
or
distribute Digital Files in accordance with this Agreement, and to convert
the
Lyrics of EMI Compositions into Lyric Files or to display the Lyric Files
in
accordance with this Agreement (including, without limitation, by acquiring
any
performance rights, rights in sound recordings embodied in Master Recordings
and
A/V Master Recordings, and rights to exploit EMI Compositions embodied in
A/V
Master Recordings as Limited Video Downloads and On-Demand Video Streams);
and
(d) Licensee’ conversion of EMI Compositions into Digital Files and the Lyrics
of EMI Compositions Into Lyric Files, the reproduction, distribution and/or
display thereof, and the Service and the operation thereof (including the
display or other transmission of advertisements either alone or in connection
with the exploitation of sound recordings, musical compositions, lyrics and/or
other content) (i) do not and shall not, to the best of Licensee’ knowledge,
infringe upon or violate the intellectual property rights, privacy or publicity
rights, or other rights of any third party, (ii) comply with all applicable
laws, rules and regulations, and (iii) shall not result in any liability
whatsoever to EMI.
12.2 EMI
represents and warrants that it has the full right, power and authority to
enter
into this Agreement and perform its obligations hereunder, and to grant to
rights granted to Licensee hereunder.
12.3 Licensee
agrees to indemnify, defend and hold harmless EMI, (“Indemnitee”)
from
and against any losses, injuries, damages, claims, expenses and costs (including
without limitation reasonable attorneys’ fees) (“Claims”)
incurred or suffered by Indemnitee, arising from any third-party actions,
claims, suits or legal proceedings of any kind, caused by, arising from or
related to: (a) Licensee’ failure to perform any of its obligations under this
Agreement and/or any breach or alleged breach of any representation, warranty
or
covenant hereunder; (b) the operation of the Service or Licensee’ business; (c)
any complaints or allegations of a User or other Licensee customer concerning
Licensee, the Service, or any Digital File or Lyric File; and (d) any acts
or
omissions of any Licensee employee or agent. EMI shall promptly notify Licensee
in writing of any Claim and allow Licensee to control the defense thereof;
provided that (i) defense counsel for such Claims shall be subject to EMI’s
prior written approval, (ii) EMI may, at its option and expense, participate
and
appear on an equal footing
with Licensee in such Claim, and (iii) Licensee may not settle such Claim
without EMI’s prior written approval.
12.4 EMI
agrees to indemnify, defend and hold harmless Licensee, its respective officers,
employees and agents, (collectively, the “Licensee
Indemnitees”)
from
and against any losses, injuries, damages, claims, expenses and costs (including
without limitation reasonable attomeys’ fees) (“Claims”)
incurred or suffered by any Licensee Indemnitee, arising from any third-party
actions, claims, suits or legal proceedings of any kind, caused by, arising
from
or related to: (a) EMI’s failure to perform any of its obligations under this
Agreement and/or any breach or alleged breach of any representation, warranty
or
covenant hereunder and (b) any acts or omissions of any EMI employee or agent.
Licensee shall promptly notify EMI in writing of any Claim and allow EMI
to
control the defense thereof; provided that (i) defense counsel for such Claims
shall be subject to Licensee’ prior written approval, (ii) Licensee may, at its
option and expense, participate and appear on an equal footing with EMI in
such
Claim, and (iii) EMI may not settle such Claim without Licensee’ prior written
approval.
13. Termination/Default.
13.1 Licensee
understands and agrees that in the case of infringement, irreparable harm
may be
presumed, and EMI shall be entitled to seek appropriate injunctive relief,
in
addition to any other remedy that may be available at law or in equity, whether
hereunder or otherwise.
13.2 To
the
extent permitted by applicable law, and without limitation, the occurrence
of
any of the following events shall also be considered a material ▇▇▇▇▇▇ of
and
default under this Agreement: (a) failure to timely pay any amount or other
consideration described in paragraph 5 or 6 hereof; (b) the ▇▇▇▇▇▇ of any
representation or warranty described in paragraph 12 hereof; (c) the
exploitation of any musical composition owned or controlled by, or licensed
to,
EMI in a manner not permitted hereunder (d) dissolution of and/or the
liquidation of all of the assets of Licensee or the business unit(s) of Licensee
operating the Service; (e) the filing of a petition in bankruptcy or insolvency
or for an arrangement or reorganization by, for or against Licensee, which
is
not dismissed within 90 days; (f) the appointment of a receiver or trustee
for
ail or a portion of the assets of Licensee or the business unit(s) of Licensee
operating the Service, which are not dismissed or removed within 90 days;
and
(g) Licensee’ assignment of assets for the benefit of creditors, which are not
returned or reversed within 90 days. Upon the occurrence of any of the events
described in this paragraph, without limiting any other remedy that may be
available at law or in equity, whether hereunder or otherwise, this Agreement
and all license authority pursuant to any Licenses issued hereunder shall
automatically and immediately terminate without the requirement of any further
action on the part of EMI.
14. Use
of Trademarks: Publicity.
14.1 Trademarks,
Names and Likenesses.
Unless
otherwise authorized by the other party in advance and in writing, neither
party
will use (whether directly or indirectly) or permit or authorize any third
party
to use (whether directly or indirectly) any trademark or logo of the other
party, whether in advertisements, promotions, press releases, marketing
materials or otherwise, and whether in connection with the Service or
otherwise.
14.2 Publicity.
Neither
party shall issue or authorize any party to issue any press release or other
public statement concerning this Agreement without the other party’s prior
written approval.
15. Miscellaneous.
15.1 Writer/EMI
Credit.
Licensee
shall, to the extent commercially feasible, include in any graphics and/or
imagery displayed in connection with any Digital File, written credit in
legible
form setting forth the names of the writers) and publisher(s) of the EMI
Composition embodied in such Digital File and/or Lyric File. Failure to abide
by
the provisions of this paragraph shall not be a breach of this Agreement.
In
addition, Licensee welcomes any additional authorized information that EMI
may
provide with respect to its writers and publishers, with respect to the EMI
Compositions, which Licensee may use to assist In promoting EMI Compositions
and
the Service.
15.2 Notices.
All
notices hereunder shall be in writing and shall be deemed effective (a) if
provided by hand delivery, upon delivery; (b) if provided by
nationally-recognized overnight courier, one (1) business day following the
date
sent; or (c) if provided by registered or certified U.S. mail, return receipt
requested, five (5) business days following the date mailed. Notices shall
be
sent to the following addresses (as may be modified by written notice from
one
party to the other from time to time):
If
to EMI:
EMI
Entertainment World Inc.
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Senior Vice President, Legal and Business Affairs
With
a
courtesy copy to:
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
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▇▇▇▇▇▇
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If
to Licensee:
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▇▇▇▇▇▇
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▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
Chief Executive Officer
With
a
courtesy copy to:
▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Traurig
MetLife
Building
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▇▇▇▇,
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15.3 Assignment.
Licensee
shall not assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, by operation of law or otherwise, this Agreement
or any of its rights or obligations under this Agreement without the prior
written consent of EMI. Any purported assignment, sale, transfer, delegation
or
other disposition by Licensee shall be null and void. For purposes of this
section, the terms “assign” and “assignment” shall not include any merger,
consolidation, change of control, or sale of all or substantially all assets.
Subject to the foregoing, this Agreement shall inure to the benefit of the
parties and their respective successors and permitted assigns.
15.4 Entire
Agreement; Amendment; Copyright Act Amendments of No Effect.
This
Agreement, including all exhibits, schedules and attachments hereto
(incorporated herein by this reference), represents the entire understanding
of
the parties with respect to the subject matter hereof, supersedes all prior
and
contemporaneous agreements and understandings of the parties (whether written
or
oral) with respect to the subject matter hereof. This Agreement may not be
altered or amended except in a written instrument executed by both parties.
Any
revisions pending as of the Effective Date to section 115 of title 17 of
the
U.S. Code, and any revision to section 117 of title 17 of the U.S. Code that
may
subsequently be enacted shall, regardless of form or content, have no affect
whatsoever on the terms of this Agreement.
15.5 Governing
Law; Jurisdiction.
This
Agreement shall be governed by, and construed in accordance with, federal
law
and/or the laws of the State of New York (without giving effect to any choice
of
law rule that would cause the application of the laws of any jurisdiction
other
than the internal laws of the State of New York to the rights and duties
of the
parties). With respect to any action or proceeding arising out of this
Agreement, the parties: (a) agree that the sole and exclusive venue for such
action or proceeding shall be in a court of appropriate jurisdiction located
in
New York County, New York; (b) agree to the appropriateness of, and waive
any
objection concerning, the propriety
and/or convenience of, proceeding in such venue; and (c) consent to the personal
jurisdiction of such court.
15.6 Severability;
Waiver.
If a
court should determine that any part of this Agreement is invalid or
unenforceable, such provision shall be enforced to the maximum extent possible
so as to affect the intent of the parties, and the remainder of this Agreement
shall remain in full force and effect. Performance of any obligation required
of
a party hereunder may be waived only by a written waiver signed by a duly
authorized officer of the other party, which waiver shall be effective only
with
respect to the specific obligation described therein.
15.7 Cumulative
Remedies.
Except
as otherwise expressly provided herein, no remedy specified in this Agreement
is
intended to be exclusive of any other remedy, and each and every remedy will
be
cumulative and in addition to every other right or remedy provided herein
or
available at law or in equity.
15.8 Headings.
The
titles used in this Agreement are used for convenience only and are not to
be
considered in construing or interpreting this Agreement.
15.9 Assistance
of Counsel.
Each
party hereto acknowledges that it has been represented by its own independent
counsel, who has reviewed this Agreement and discussed the terms herein with
his
or her respective client prior to execution.
15.10 Counterparts.
This
Agreement may be executed in multiple counterparts and delivery of art executed
counterpart may be made by facsimile, each such counterpart to be considered
and
accepted as an original, and all such counterparts together to constitute
a
single Agreement.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the Effective Date:
|
MOHEN,
INC. D/B/A SPIRAL FROG
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| /s/ SFR Kent | |||
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SFR Kent |
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Title: CEO
Date: 08-28-06
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EMI ENTERTAINMENT WORLD
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| /s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||
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▇▇▇▇▇ ▇▇▇▇▇▇ |
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Title: General Counsel Worldwide
Date: 08-30-06
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EXHIBIT
A
DESCRIPTION
OF THE SERVICE