EXHIBIT 10.59
AMENDMENT NO. 1 TO OPTION AND PURCHASE AGREEMENT
This AMENDMENT NO. 1, dated as of January 9, 2003 (the
"Amendment Effective Date"), to the Option and Purchase Agreement, dated as of
November 15, 2002 (as such agreement may be amended, modified or supplemented
from time to time, the "Option Agreement"), is entered into by and between
Liquid Audio, Inc., a corporation organized under the laws of the state of
Delaware ("Liquid"), and Universal Music Group, Inc., a corporation organized
under the laws of the state of California ("UMG"). Liquid and UMG are sometimes
referred to herein as the "Parties" and individually referred to as a "Party."
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Option Agreement.
WITNESSTH:
WHEREAS, on November 15, 2002, the Parties entered into the
Option Agreement setting forth the terms and conditions upon which UMG may
acquire certain tangible and intangible assets owned, leased or licensed by
Liquid:
WHEREAS, the Parties wish to permit UMG to assign its rights and
obligations under the Option Agreement to ▇▇▇▇▇▇▇▇ Merchandisers, LP, a Texas
limited partnership with its principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 79103("▇▇▇▇▇▇▇▇"); and
WHEREAS, Liquid has provided UMG with a Trigger Event Notice;
and
WHEREAS, the Parties wish to extend the period during which UMG
or ▇▇▇▇▇▇▇▇ may exercise the Option.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby confirmed and acknowledged, the parties
hereto agree as follows:
1. Permitted Assignment to Unaffiliated Third Party.
Section 22.5 of the Option Agreement is hereby deleted in its entirety and
replaced with the following:
"22.5 Assignment. Notwithstanding any other provision
of this Option Agreement to the contrary, UMG may assign its rights
under this Option Agreement to a UMG Affiliate or its rights and
obligations under this Option Agreement to ▇▇▇▇▇▇▇▇; provided that (i)
no such assignment to a UMG Affiliate shall release UMG from its
obligations hereunder, and (ii) an assignment to ▇▇▇▇▇▇▇▇ shall release
UMG from its obligations hereunder, except for UMG's obligation to
deliver the termination agreement under Section 2(b) of Amendment Number
1 to the Option and Purchase Agreement and UMG's obligation under
Section 5(c), and provided that ▇▇▇▇▇▇▇▇ agrees in writing to be bound
by the obligations under the Agreement and assumes for the benefit of
Liquid any such obligation. ▇▇▇▇▇▇▇▇ is hereby pre-approved as a third
party to which UMG may
assign its rights hereunder. Liquid shall not assign its rights or
obligations hereunder to any person without UMG's consent, which shall
not unreasonably be withheld; provided that Liquid may transfer Service
Assets to an Affiliate as set forth in Section 14 hereof."
2. Extension of Option Exercise Period.
(a) Section 4 of the Option Agreement is hereby
deleted in its entirety and replaced with the following:
"4. Liquid's Trigger Event Notice and UMG's
Exercise of the Option. Liquid shall give UMG prompt written
notice of the occurrence of any Trigger Event (each, a "Trigger
Event Notice"). For purposes of clarity, a Trigger Event Notice
is not a condition precedent to UMG's exercise of its Option.
Upon the delivery of the Trigger Event Notice dated January 3,
2003, receipt of which is acknowledged by UMG as of January 6,
2003, UMG shall have until 12:00 pm (Los Angeles time) on
January 21, 2003 (the "Option Exercise Period") to exercise its
Option. Any option exercise notice may be delivered by facsimile
addressed to the attention of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at (650.549.2370)
provided, however, that any notice delivered by fax shall also
be delivered not later than one business day later either
personally or via overnight courier in accordance with Section
22.8."
(b) In consideration of the agreements made herein the
Parties agree:
(i) that (A) if UMG (or its assignee)
exercises its option under the Option Agreement, it will deliver
at the Closing the Termination Agreement as required under
Section 9.1.1 of the Option Agreement, and (B) if UMG or its
assignee does not exercise the option by 12:00 p.m. on January
21, 2003, the Parties will enter into the Termination Agreement
as of such date (provided Liquid's obligations with respect to
the Availability Payment as defined (and modified) under clause
(ii) below shall survive); and
(ii) with respect to the $100,000 amount due
from Liquid to UMG under Section 3(a)(ii) of the Format
Agreement (the "Availability Payment"). (A) the Availability
Payment is reduced from $100,000 to $50,000 as of the Amendment
Effective Date, and (B) the remaining Availability Payment shall
be reduced on the Closing date to $0 if the Closing occurs under
the Option Agreement and otherwise shall be payable by Liquid to
UMG not later than April 2, 2003.
3. Disclosure to Third Party. UMG and Liquid hereby
expressly agree that the Option Agreement and this Amendment may be disclosed to
▇▇▇▇▇▇▇▇, which may become an assignee of UMG's rights under the Option
Agreement, provided in each instance that ▇▇▇▇▇▇▇▇ agrees to maintain the
confidentiality of such information in accordance with section 22.15 of the
Option Agreement.
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4. No Other Changes. Except as expressly set forth above,
all of the provisions of the Option Agreement shall remain unchanged and in full
force and effect.
5. Miscellaneous.
(a) This Amendment shall be governed by and
construed in accordance with the laws of the State of California.
(b) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same Amendment.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Amendment as of the Amendment Effective Date.
LIQUID AUDIO, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title: CEO
UNIVERSAL MUSIC GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. Ring
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Name: ▇▇▇▇▇ ▇. Ring
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Title: VP Bus Dev & Bus Affairs, eLabs
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