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EXHIBIT 10.9
THE ULTIMATE BAND LIST, LLC/ARTISTDIRECT, LLC
EXCHANGE, CONTRIBUTION AND DISTRIBUTION AGREEMENT
This Exchange, Contribution and Distribution Agreement (the "Agreement")
is made as of May 18, 1999 by and among ARTISTdirect, LLC, a California limited
liability company ("AD"), ARTISTdirect New Media, LLC, a California limited
liability company and indirectly wholly-owned subsidiary of AD ("ADNM"), The
Ultimate Band List, LLC, a California limited liability company (the "UBL"),
▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), ▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and each of the unitholders of the
UBL (other than ADNM) listed on the signature pages hereto (individually, a
"Unitholder," and collectively, the "Unitholders").
W I T N E S S E T H:
WHEREAS, each of AD, ADNM and the Unitholders have agreed that it is in
the best interests of all that (i) each of the Unitholders exchange their Common
Units ("UBL Common Units") and/or Series A Preferred Units ("UBL Series A
Preferred Units"), and all accrued and unpaid Preferred Return thereon, as
applicable, in the UBL (collectively, the "UBL Units") for Common Units ("AD
Common Units") and/or Series A Preferred Units ("AD Series A Preferred Units")
in AD (collectively, the "AD Units"), and an identical amount of accrued and
unpaid Preferred Return thereon, and (ii) ADNM convert its Series B Preferred
Units in the UBL ("UBL Series B Preferred Units") into UBL Common Units, and
then distribute such UBL Common Units, as well as its other UBL Common Units, to
AD and to ARTISTdirect Holdings, LLC, a California limited liability company and
direct wholly-owned subsidiary of AD ("AD Holdings"), such that upon
consummation of such distribution, AD and AD Holdings will hold a 99% and 1%
interest in the UBL, respectively, each of such transactions to occur on the
terms and conditions outlined in this Agreement; and
WHEREAS, to effect the foregoing, (i) the Unitholders have agreed to make
an aggregate capital contribution to AD in the form of 8,042,134.01 UBL Common
Units and 1,940,000 UBL Series A Preferred Units, and in exchange therefor, AD
has agreed to issue to the Unitholders, upon the terms and conditions provided
in this Agreement and in that certain Second Amended and Restated Operating
Agreement of ARTISTdirect, LLC to be entered into in connection herewith (as so
amended, the "Operating Agreement"), an aggregate of 15,469,494 AD Common Units
and an aggregate of 3,372,921 AD Series A Preferred Units, all as specified
further on the signature pages to this Agreement, (ii) in connection therewith,
all accrued and unpaid Preferred Return on such UBL Series A Preferred Units
shall become an identical amount of accrued and unpaid Preferred Return on the
AD Series A Preferred Units issued in exchange therefor, (iii) in order to
induce ▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇▇") to exchange UBL Common Units for AD Common Units
hereunder and to cause the equalization of the ownership of ▇▇▇▇▇, ▇▇▇▇▇▇ and
▇▇▇▇▇▇, ▇▇▇▇▇▇ has agreed to contribute 491,467 AD Common Units to the capital
of AD, ▇▇▇▇▇▇ has agreed to contribute 995,819 AD Common Units to the capital of
AD, and ▇▇▇▇▇ will receive an aggregate of 1,487,286 AD Common Units (which is
in excess of the number of AD Common Units which
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it would have otherwise received pursuant to the terms of this Agreement based
upon its proportionate ownership of its UBL Common Units otherwise to be
exchanged for AD Common Units), and (iv) ADNM has agreed to make an aggregate
distribution of 9,281,452 UBL Common Units to AD and 93,752 UBL Common Units to
AD Holdings.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Unitholders, AD, ADNM and the
UBL hereby agree as follows:
A G R E E M E N T:
Terms used herein which are not defined shall have such definitions as
are given to them in the Operating Agreement.
SECTION 1
The Exchange, Contribution and Distribution Transactions
1.1 Exchange Transaction. Subject to the terms and conditions set forth
in this Agreement and in the Operating Agreement, upon execution of this
Agreement, (a) each Unitholder agrees to exchange that number of UBL Common
Units and UBL Series A Preferred Units set forth after such Unitholder's name on
the signature pages to this Agreement in return for that portion of the AD
Common Units and AD Series A Preferred Units listed thereat, and AD agrees to
issue such AD Units to the Unitholders in exchange for such UBL Units, all as
specified further on the signature pages to this Agreement, and (b) in
connection with such exchange, the accrued and unpaid, Preferred Return on such
UBL Series A Preferred Units set forth after such Unitholder's name on the
signature pages to this Agreement shall become an identical amount of accrued
and unpaid Preferred Return on the AD Series A Preferred Units issued in
exchange therefor, and such UBL Units and the accrued and unpaid Preferred
Return on such UBL Series A Preferred Units shall be deemed cancelled.
1.2 Contribution Transaction. Subject to the terms and conditions set
forth in this Agreement and in the Operating Agreement, upon execution of this
Agreement, ▇▇▇▇▇▇ shall contribute 491,467 AD Common Units to the capital of AD,
▇▇▇▇▇▇ shall contribute 995,819 AD Common Units to the capital of AD, and ▇▇▇▇▇
will receive an aggregate of 1,487,286 AD Common Units (which in excess of the
number of AD Common Units which he would have otherwise received pursuant to the
terms of this Agreement based upon his proportionate ownership of UBL Common
Units otherwise to be exchanged for AD Common Units) as set forth on the
signature pages to this Agreement, in order that the percentage ownership in AD
of each of ▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ will be equal after giving effect to such
contribution and issuance and the other transactions contemplated by this
Agreement.
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1.3 Distribution Transaction. Subject to the terms and conditions set
forth in this Agreement and in the Operating Agreement, upon execution of this
Agreement, ADNM agrees to convert all of its UBL Series B Preferred Units, and
all accrued and unpaid Preferred Return thereon, into UBL Common Units, and to
distribute such UBL Common Units, along with the 7,350,000 UBL Common Units that
it already owns, to AD and AD Holdings, as follows: ADNM will distribute
9,281,452 of such UBL Common Units to AD, and will distribute 93,752 of such UBL
Common Units to AD Holdings, so that after giving effect to such distributions,
AD and AD Holdings will hold a 99% and 1% interest in ADNM, respectively.
SECTION 2
Closing, Payment and Delivery
2.1 Closing Date and Place of Closing. The closing (the "Closing") shall
be held on May 18, 1999 (the "Closing Date") and shall be held at the offices of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇ or on such other date and at such other place as shall be mutually
agreed to by the parties hereto.
2.2 Payment and Delivery. At the Closing, AD will deliver to each
Unitholder a fully executed copy of the Operating Agreement, whereby such
Unitholder shall become the holder of that number of AD Units set forth next to
such Unitholder's name on the signature pages hereto.
SECTION 3
Representations and Warranties of AD
AD hereby represents and warrants to the Unitholders that, except as set
forth on the "Schedule of Exceptions" attached as Exhibit A hereto which refers
specifically to the representations and warranties in this Agreement and which
reasonably identifies the basis for an exception thereto:
3.1 Capitalization. Exhibit A sets forth both prior to and after giving
effect to the Closing, the authorized equity capital of AD and the number of
issued and outstanding securities of each class of securities of AD. All of the
issued and outstanding securities, including the AD Units to be issued pursuant
to the terms of this Agreement, are validly issued, fully paid and
non-assessable. Except as set forth in the Operating Agreement or on Exhibit A,
there are (i) no existing options, warrants, calls, commitments or other
contracts to which AD is a party requiring, and no convertible securities of AD
outstanding which upon conversion would require, the issuance of any additional
securities of AD, or other securities convertible into securities of AD, (ii) no
contracts to which AD is a party, with respect to the voting or Transfer of such
securities and (iii) no shareholders' preemptive rights or rights of first
refusal or other similar
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rights with respect to the issuance of securities by AD. True and correct copies
of the Articles of Organization of AD and the Operating Agreement have been
delivered to the Unitholders.
3.2 Authorization and Issuance of Units. The issuance by AD of the AD
Units has been duly authorized by all necessary action on the part of AD and,
upon issuance in accordance with the terms hereof, the AD Units will be validly
issued, fully paid and non-assessable, free and clear of all liens.
3.3 Securities Laws. In reliance on the investment representations
contained in Section 4.4 of this Agreement, and assuming that each of the
Unitholders resides at the address listed in Section 12.4 of this Agreement, the
offer, issuance, sale and delivery of the AD Units, as provided in this
Agreement, are exempt from the registration requirements of the Securities Act
and all California state securities laws, and are otherwise in compliance with
such laws. Neither AD nor any Person acting on its behalf has taken or will take
any action which might subject the offering, issuance or sale of the AD Units to
the registration requirements of Section 5 of the Securities Act.
3.4 Existence; Compliance with Law. AD (i) is a limited liability company
duly organized, validly existing and in good standing under the laws of its
applicable jurisdiction of organization; (ii) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification (except for jurisdictions in which the failure to so qualify or to
be in good standing would not have a material adverse effect on the properties,
business, condition (financial or otherwise) or results of operations (a
"Material Adverse Effect") of AD; (iii) has the requisite power and authority
and the legal right to own, pledge, mortgage or otherwise encumber and operate
its properties, to lease the property it operates under lease, and to conduct
its business as now being conducted; (iv) has all licenses, permits, consents or
approvals from or by, and has made all filings with, and has given all notices
to, all governmental authorities having jurisdiction, to the extent required for
such ownership, operation and conduct except where such failure would not have
or could not reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect on AD; (v) is in compliance with its organizational
documents and operating agreements; and (vi) is in compliance with all
applicable provisions of law, except for such noncompliance which would not
have, or could not reasonably be expected to have, a Material Adverse Effect on
AD.
3.5 Subsidiaries. Except as disclosed on Exhibit A, there are no
subsidiaries of AD, and AD does not hold any securities or other proprietary
interest, directly or indirectly, of any Person or have any agreement or
arrangement to acquire any securities or other proprietary interest other than
the interests described in Exhibit A.
3.6 Power, Authorization; Enforceable Obligations. Except as set forth in
Exhibit A (a) the execution, delivery and performance by AD of this Agreement
and all agreements to be executed and delivered in connection herewith (the
"Ancillary Agreements") to which it is a party and all other instruments and
documents to be delivered by AD, the issuance by AD of the
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AD Units and the consummation of the other transactions contemplated by any of
the foregoing: (i) are within AD's power and authority; (ii) have been duly
authorized by all necessary or proper action; (iii) are not in contravention
(with or without the lapse of time or giving of notice or both) of any provision
of AD's organizational documents or Operating Agreement; (iv) do not and will
not violate (with or without the lapse of time or giving of notice or both) any
law, or any order or decree of any governmental authority; (v) do not and will
not (with or without the lapse of time or giving of notice or both) conflict
with or result in the breach or termination of, constitute a default under,
accelerate any performance required by, give rise to any right to increase the
obligations or otherwise modify the terms under, any contract to which AD is a
party or by which AD or any of its assets or property is bound; (vi) do not and
will not (with or without the lapse of time or giving of notice or both) result
in the creation or imposition of any lien upon any of the assets or property of
AD; and (vii) do not require the consent or approval of, or any filing with, any
governmental authority or any other Person, except in the case of (iv), (v),
(vi) and (vii) for such violations, conflicts, breaches, terminations, defaults,
accelerations, rights, modifications, liens, consents, approvals or filings
which, singly or in the aggregate, would not have or could not reasonably be
expected to have, a Material Adverse Effect on AD. Each of this Agreement and
the other Ancillary Agreements to which AD is a party has been duly executed and
delivered by AD and, assuming the due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a legal, valid and
binding obligation of AD, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.7 Securities Act. It is acquiring the UBL Units for investment and not
with the current view to, or for resale in connection with, any distribution
thereof, other than in compliance with Federal and State securities laws. It is
an "accredited investor" within the meaning of the Securities Act and the rules
thereunder, and understands that the UBL Units have not been registered under
the Securities Act nor qualified under any State blue sky law by reason of
specified exemptions therefrom which depend upon, among other things, the bona
fide nature of the investment intent expressed herein. It acknowledges that the
UBL Units must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
3.8 Disclosure. The representations and warranties of AD contained in (i)
this Agreement and the exhibits attached hereto and (ii) any certificate
furnished or to be furnished to the Unitholders at the Closing, when read
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.
3.9 Investment Company. AD is not and, after giving effect to the
transactions contemplated by this Agreement and the Ancillary Agreements, will
not be an "investment company" as defined in the Investment Company Act of 1940.
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SECTION 4
Representations and Warranties of Unitholders
Each Unitholder hereby represents and warrants to AD, individually and
not collectively, that:
4.1 Existence; Power and Authority. If not an individual, it (i) is a
limited liability company, partnership or corporation duly organized, validly
existing and in good standing under the laws of its applicable jurisdiction of
organization or formation, and (ii) is duly qualified as a foreign entity and in
good standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification (except
for jurisdictions in which the failure to so qualify or to be in good standing
would not have a Material Adverse Effect on such entity). Whether or not it is
an individual, it has all requisite power, authority and capacity to enter into
this Agreement and the Ancillary Agreements to which it is a party and all other
documents to be executed and delivered by it pursuant to the terms hereof, to
exchange the UBL Units to be exchanged by it, and to carry out and perform its
other obligations under such agreements and other documents
4.2 Authorization; No Conflicts. All action on the part of it necessary
for the authorization, execution, delivery and performance by it of this
Agreement and the Ancillary Agreements to which it is a party, and for the
consummation of the transactions contemplated herein, has been taken. This
Agreement and the Ancillary Agreements to which it is a party have been duly
executed and delivered by it, and assuming the due authorization, execution and
delivery by the other parties hereto, will be a valid and binding obligation of
it, enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity). The
execution, delivery and performance by it of this Agreement and the Ancillary
Agreements to which it is a party and compliance therewith will not result in
any violation of and will not conflict with, or result in a breach of any of the
terms of, or constitute a default under, or require any consent under, (i) any
provision of state or federal law to which it is subject, or (ii) any mortgage,
indenture, agreement, instrument, judgment, decree, order, or, to the best
knowledge of it, any rule or regulation or other restriction to which it is a
party or by which it or any of its assets are bound.
4.3 Representations Regarding Exchange of UBL Units.
(a) It has good and valid title to the UBL Units being exchanged
by it pursuant to this Agreement, free and clear of all liens, encumbrances,
security interests and claims whatsoever;
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(b) Upon exchange of its portion of the UBL Units, as provided
herein, at the Closing, it will convey to AD good and valid title to such UBL
Units, free and clear of all liens, encumbrances and security interests of any
kind; and
(c) No actions, suits or proceedings before or by any court or
governmental agency, body or authority, or arbitrator are pending or threatened
or contemplated, seeking to prevent the exchange of the UBL Units or the
consummation of the transactions contemplated by this Agreement.
4.4 Representations Regarding Receipt of AD Units. It:
(a) is acquiring the AD Units for its own account, for investment
purposes and not with a current view to the distribution thereof, and will not,
directly or indirectly, subdivide, offer or Transfer any of the AD Units (or
solicit any offers to buy, purchase, or otherwise acquire any of the AD Units),
other than in compliance with Federal and State securities laws and the terms of
the Operating Agreement and the Securities Purchase Agreement (as defined in
Section 11);
(b) is an "accredited investor" within the meaning of the
Securities Act and the rules thereunder, and understands that the AD Units have
not been registered under the Securities Act nor qualified under any State blue
sky law by reason of specified exemptions therefrom which depend upon, among
other things, the bona fide nature of the investment intent expressed herein;
(c) subject to the provisions of the Operating Agreement and the
Securities Purchase Agreement, acknowledges that the AD Units must be held
indefinitely unless they are subsequently registered under the Securities Act or
an exemption from such registration is available; and
(d) is aware that AD has a short operating history, and that an
investment in the AD Units is highly speculative.
4.5 Disclosure. The representations and warranties of it contained in (i)
this Agreement and the exhibits attached hereto and (ii) any certificate
furnished or to be furnished to AD at the Closing, when read together, do not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.
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SECTION 5
Intentionally Omitted
SECTION 6
Conditions to Obligations of AD
The obligation of AD to issue the AD Units in exchange for the UBL Units,
and to consummate the other transactions contemplated by this Agreement and the
Ancillary Agreements, is subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
6.1 Representations and Warranties. The representations and warranties of
each of the Unitholders shall be true and correct in all respects on the Closing
Date.
6.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Unitholders on or prior
to the Closing Date shall have been performed or complied with in all respects.
6.3 Legal Issuance. At the time of the Closing, the exchange of the UBL
Units for the AD Units shall be legally permitted by all laws and regulations to
which the parties to this Agreement are subject.
6.4 Qualification. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body that are required in connection
with the lawful issuance and exchange of the UBL Units for the AD Units pursuant
to this Agreement shall have been duly obtained and shall be effective on and as
of the Closing.
6.5 Deliveries at Closing. At the Closing, the Unitholders will deliver
to AD, as applicable, the following documents:
(i) the Operating Agreement, in substantially the form attached
hereto as Exhibit B, duly executed by each Unitholder; and
(ii) the Amended and Restated Registration Rights Agreement of
AD, in substantially the form attached hereto as Exhibit C (the "Registration
Rights Agreement"), duly executed by each Unitholder that is a party thereto.
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SECTION 7
Conditions to Obligations of the Unitholders
The obligations of the Unitholders to exchange their UBL Units for AD
Units, and to consummate the other transactions contemplated by this Agreement
and the Ancillary Agreements, is subject to the fulfillment on or prior to the
Closing Date of each of the following conditions:
7.1 Representations and Warranties. The representations and warranties
made by AD shall be true and correct in all respects on the Closing Date.
7.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by AD on or prior to the Closing
Date shall have been performed or complied with in all respects.
7.3 Legal Issuance. At the time of the Closing, the exchange of the UBL
Units for the AD Units shall be legally permitted by all laws and regulations to
which the parties to this Agreement are subject.
7.4 Qualification. All authorizations, approvals or permits, if any, of
any governmental authority or regulatory body that are required in connection
with the lawful issuance and exchange of the UBL Units for the AD Units pursuant
to this Agreement shall have been duly obtained and shall be effect on and as of
the Closing.
7.5 Deliveries at Closing. At the Closing, AD will deliver to the
Unitholders, as applicable, the following documents:
(i) the Operating Agreement, duly executed by AD;
(ii) the Registration Rights Agreement, duly executed by AD;
(iii) a long form certificate of good standing (with tax) showing
that AD is organized and in good standing in its jurisdiction of organization;
(iv) copies of the organizational documents of AD, certified as
of a recent date by the Secretary of State of the jurisdiction of its
organization; and
(v) a certificate or certificates executed by duly elected
officers of AD certifying that the representations and warranties of such entity
are true and correct in all respects on the Closing Date, that all covenants,
agreements and conditions contained in this Agreement to be performed or
complied with by it on or before the Closing Date shall have been so performed
or complied with, certifying the organizational documents of AD specified in
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(iv) above, and further certifying the names and signatures of such individuals
authorized to sign this Agreement and such certificate and the Ancillary
Agreements.
SECTION 8
Intentionally Omitted
SECTION 9
Indemnification and Liability
9.1 Indemnity.
(a) Each Unitholder agrees, individually and not collectively, to
indemnify and hold harmless AD, its Affiliates and their respective officers,
directors and employees from and against any liabilities, obligations, losses,
damages, amounts paid in settlement, penalties, actions, judgments, fines,
suits, claims, costs, attorneys' fees, expenses and disbursements of any kind
("Losses") which may be imposed upon, incurred by or asserted against any such
party in any manner relating to or arising out of any untrue representation,
breach of warranty or failure to perform any covenants or agreement by such
party contained herein, in any other Ancillary Agreement or in any certificate
or document delivered pursuant hereto or thereto.
(b) AD agrees to indemnify and hold harmless the Unitholders from
and against any Losses which may be imposed upon, incurred by or asserted
against them in any manner relating to or arising out of any untrue
representation, breach of warranty or failure to perform any covenants or
agreement by AD contained herein or in any certificate or document delivered
pursuant hereto or thereto.
(c) Each indemnifying party (an "Indemnifying Party") also agrees
to advance expenses as incurred to the fullest extent permitted under applicable
law; provided, however, that the party being indemnified (the "Indemnified
Party") provides an undertaking to repay such advances to such party if it is
ultimately determined that such Indemnified Party is not entitled to
indemnification. Each of the Unitholders and AD will cooperate in the defense of
any such matter. The rights of the Indemnified Parties to indemnification under
this Section 9 shall be their sole and exclusive remedy with respect to any
breach of any representation or warranty contained in this Agreement.
Notwithstanding anything to the contrary contained in this Agreement, the amount
to which any Indemnified Party shall be entitled pursuant to this Section 9.1
shall be limited to the Losses actually sustained by such Indemnified Party, net
of any tax benefits derived by such Indemnified Party in respect of such Losses.
9.2 Indemnification Procedures. Any Indemnified Party seeking
indemnification pursuant to Section 9.1 with respect to a claim, action, suit or
proceeding by a Person who is not
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a Indemnified Party shall give prompt written notice to the Indemnifying Party
of the assertion of any claim, or the commencement of any action, suit or
proceeding, in respect of which indemnity may be sought hereunder, provided that
the failure to give such notice shall not affect the Indemnified Party's rights
to indemnification hereunder unless such failure shall prejudice in any material
respect the ability of the Indemnifying Party to defend such claim, action, suit
or proceeding. The Indemnifying Party shall have the right to assume the defense
of any such action, suit or proceeding at its expense; provided, however, that
(i) such claim, action, suit or proceeding seeks only monetary damages and, in
the reasonable judgment of the Indemnified Party, the Indemnifying Party has
adequate financial and other resources to undertake such defense and satisfy any
indemnifiable Losses arising from such action, suit or proceeding and (ii) the
selection of counsel is approved by the Indemnified Party (which approval shall
not be unreasonably withheld or delayed). If such claim, action, suit or
proceeding seeks relief other than or in addition to monetary damages or if the
Indemnified Party so determines that the Indemnifying Party does not have
adequate resources, or the Indemnifying Party shall elect not to assume the
defense of any such action, suit or proceeding, or fails to make such an
election within twenty (20) days after it receives such notice pursuant to the
first sentence of this Section 9.2, the Indemnified Party may assume such
defense with counsel of its choice and at the expense of the Indemnifying Party
and shall defend such claim, action, suit or proceeding diligently and in good
faith. The Indemnified Party shall have the right to participate in (but not
control) the defense of an action, suit or proceeding defended by the
Indemnifying Party hereunder and to retain its own counsel in connection with
such action, suit or proceeding, but the fees and expenses of such counsel shall
be at the Indemnified Party's expense; provided, however, that the Indemnifying
Party shall bear the expenses as incurred of counsel to the Indemnified Party if
(i) the Indemnifying Party and the Indemnified Party have mutually agreed in
writing to the retention of such counsel or (ii) the named parties in any such
action, suit or proceeding (including impleaded parties) include the
Indemnifying Party and the Indemnified Party, and representation of the
Indemnifying Party and the Indemnified Party by the same counsel would, in the
opinion of counsel to the Indemnified Party, create a conflict; provided further
that, unless otherwise agreed by the Indemnifying Party, if the Indemnifying
Party is obligated to pay the fees and expenses of such counsel, the
Indemnifying Party shall be obligated to pay only the fees and expenses
associated with one attorney or law firm, as applicable, for the Indemnified
Party, as well as the fees and expenses associated with local counsel. The
Indemnifying Party shall not be liable under Section 9.1 for any settlement
effected without its written consent, which consent will not be unreasonably
withheld or delayed, of any claim, action, suit or proceeding in respect of
which indemnity may be sought hereunder.
SECTION 10
Expenses
AD, ADNM, the UBL and the Unitholders shall each bear their own legal and
other expenses and costs incurred in connection with the negotiation and
execution of this Agreement and each other Ancillary Agreement and the
transactions contemplated hereby and thereby.
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SECTION 11
Consent to Termination of Certain Agreements; Waivers of Rights
By execution of this Agreement, each of Geiger, Muller, ADNM, the UBL and
the Unitholders that are parties to such documents hereby consents to and agrees
that, concurrent with the Closing, (i) that certain Amended and Restated
Registration Rights Agreement dated as of October, 1998 by and among the UBL,
Constellation Venture Capital, L.P., Constellation Ventures (BVI), Inc.
(collectively, "Constellation") and ▇▇▇▇▇, (ii) that certain Voting Agreement
and Irrevocable Proxy dated August 12, 1998 by and among Psilos Group Partners,
L.P. ("Psilos Group"), Constellation, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, (iii) that certain
Voting Agreement and Irrevocable Proxy dated October 1, 1998, by and among
DreamMedia Internet Ventures, LLC ("Dream Media"), Constellation, ▇▇▇▇▇▇ and
▇▇▇▇▇▇, (iii) that certain Voting Agreement and Irrevocable Proxy dated December
1, 1998, by and among ▇▇▇▇ ▇▇▇▇▇▇ ("Kawabe"), Constellation, ▇▇▇▇▇▇ and ▇▇▇▇▇▇
and (iv) that certain Voting Agreement and Irrevocable Proxy dated December 1,
1998, by and among CCP/Psilos UBL, LLC ("CCP", and together with Psilos Group,
"Psilos"), Constellation, ▇▇▇▇▇▇ and ▇▇▇▇▇▇, shall terminate and be of no
further force and effect. In addition, each of Geiger, Muller, ADNM, the UBL and
the Unitholders that may have certain rights, in connection with the
transactions contemplated by this Agreement, pursuant to (i) Section 5.1(h) and
Section 5.1(j) of that certain Securities Purchase Agreement dated as of July
28, 1998 by and among AD, the UBL and Constellation (as amended, the "Securities
Purchase Agreement"), (ii) Section 12 of that certain Amended and Restated
Operating Agreement of the UBL dated as of July 28, 1998, as amended, and (iii)
Section 3.8(d)(i) and Section 12 of the Amended and Restated Operating Agreement
of AD, as amended, hereby consents to and agrees to waive such rights solely in
connection with the transactions contemplated by this Agreement.
SECTION 12
Miscellaneous
12.1 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with, the laws of the State of California without regard
to the principles thereof relating to conflict of laws. Each of the parties
hereby submits to personal jurisdiction and waives any objection as to venue in
the County of Los Angeles, State of California. Service of process on the
parties in any action arising out of or relating to this Agreement shall be
effective if mailed to the parties in accordance with Section 12.4 hereof. The
parties hereto waive all right to trial by jury in any action or proceeding to
enforce or defend any rights under this Agreement.
12.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of and be binding upon
the successors and assigns of the parties.
12.
13
12.3 Entire Agreement. This Agreement (including any Exhibits hereto) and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
12.4 Notices. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged (including by recognized overnight
courier service) or by registered or certified mail, return receipt requested,
postage prepaid, or by telecopy and confirmed by telecopy answerback addressed
as follows:
If to the UBL, AD, ARTISTdirect, LLC
ADNM, ▇▇▇▇▇▇ or The Ultimate Band List, LLC
▇▇▇▇▇▇: ARTISTdirect New Media, LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
in each case with copies to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇: ▇▇▇▇ ▇▇▇▇▇
c/o ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ & Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
13.
14
with copies to: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Ziffren, Brittenham, Branca & ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and to: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Constellation: Constellation Venture Capital, L.P. and
Constellation Venture (BVI), Inc.
c/o Constellation Ventures Management LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Kawabe: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation
2121 Avenue of the Stars, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Psilos Group: Psilos Group Partners, L.P.
or CCP/Psilos UBL, LLC
c/o Psilos Group
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
14.
15
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to DreamMedia: DreamMedia Internet Ventures, LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇
Imusic, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ de Regt
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback, or
three (3) business days after the same shall have been deposited with the United
States mail.
12.5 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of another party under this Agreement, shall impair any such right,
power or remedy of such party nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any
15.
16
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring.
12.6 Severability. In case any provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be affected or impaired thereby and such
remaining provisions shall be given effect, as nearly as may be, to carry out
the intent of the parties.
12.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
12.8 Amendment. No amendment or waiver of any provision of this Agreement
shall in any event be effective unless the same shall be in writing and signed
by AD and the Unitholders, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that Dream Media, Kawabe, ▇▇▇▇▇ ▇▇▇▇ and Psilos hereby grant to
Constellation a limited irrevocable power of attorney to act as the agent and
attorney-in-fact for such Unitholder, without power of substitution, for the
sole purpose of approving any amendments to or waivers of this Agreement on
behalf of such Unitholder, but other than an amendment or waiver pertaining to
this Agreement which would amend the liability of such Unitholder for breaches
of representations and warranties under this Agreement, or the AD Units to be
issued to such Unitholder as specified on the signature page to this Agreement,
it being expressly understood and agreed that this limited, irrevocable power of
attorney is coupled with an interest. No action taken pursuant to this
Agreement, including, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action, of compliance
with any representations, warranties, covenants or agreements contained herein.
The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any preceding or succeeding
breach, and no failure by any party to exercise any right or privilege hereunder
shall be deemed a waiver of such party's rights or privileges hereunder or shall
be deemed a waiver of such party's rights to exercise the same at any subsequent
time or times hereunder.
12.9 Remedies. Except as provided in the penultimate sentence of Section
9.1, (a) AD and the Unitholders shall be entitled to specific performance,
injunctive relief or any other equitable remedy against the other, as
applicable, without the posting of a bond, or proof of actual damages, in the
event of breach or threatened breach of any provision of this Agreement and (b)
each of the parties to this Agreement agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Agreement, and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate. In any
action or proceeding brought to enforce any provision of this Agreement or where
any provision hereof is validly asserted as a defense, the successful party
shall be entitled to recover reasonable attorneys fees in addition to any other
available remedy.
16.
17
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year first written above.
AD:
ARTISTdirect, LLC
a California limited liability company
By: _________________________________
▇▇▇▇ ▇▇▇▇▇▇,
Co-Chief Executive Officer
UBL:
The Ultimate Band List, LLC,
a California limited liability company
By: _________________________________
▇▇▇▇ ▇▇▇▇▇▇,
Co-Chief Executive Officer
ADNM:
ARTISTdirect New Media, LLC,
a California limited liability company
By: _________________________________
Name:
Title:
▇▇▇▇▇▇:
---------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇:
---------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
17.
18
Number of Amount of Number of
AD Series A Number of Accrued and UBL Series A Number of
Preferred AD Common Unpaid Preferred UBL Common
Units to Units to Preferred Units to be Units to be
be Issued be Issued Return Exchanged Exchanged Name and Signature
----------- --------- ----------- ------------ ----------- ------------------
0 14,787,722 0 0 7,650,000 ▇▇▇▇▇:
▇▇▇▇ ▇▇▇▇▇
1,439,577 0 $66,786.42 828,000 0 Constellation Venture Capital, L.P.
By: Constellation Ventures Management
LLC,
as General Partner
By: __________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Member
646,766 0 $30,005.49 372,000 0 Constellation Ventures (BVI), Inc.
By: __________________________
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
President and Chief Executive Officer
521,586 0 $18,666.66 300,000 0 DreamMedia Internet Ventures, L.L.C.
By: __________________________
Name:
Title:
69,545 0 $1,808.21 40,000 0
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇
278,179 0 $5,865.94 160,000 0 CCP/Psilos UBL, LLC
By: Psilos Group Investors, LLC
Its: Managing Member
By: __________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Senior Managing Director
18.
19
417,269 0 $18,262.06 240,000 0 Psilos Group Partners, L.P.
By: __________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ph.D.
Senior Managing Director
0 681,772 0 0 392,134.01
---------------------------------
▇▇▇▇▇ ▇▇▇▇
19.
20
EXHIBIT INDEX
EXHIBIT A Schedule of Exceptions (AD)
EXHIBIT B Operating Agreement
EXHIBIT C Registration Rights Agreement
21
EXHIBIT A
SCHEDULE OF EXCEPTIONS
(AD)
22
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
See Tab 6
23
EXHIBIT B
OPERATING AGREEMENT
See Tab 4