1
EXHIBIT 10.28
***TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNDER 17 C.F.R. SECTIONS 200.80(B)(4),
200.83 AND 240.24B-2
SETTLEMENT AGREEMENT
This Settlement Agreement and Mutual Release (hereinafter "Settlement
Agreement") is entered into effective as of July 26, 2000 by and between
XX0.XXX, INC. ("MP3" herein) on the one hand, and Capitol Records, Inc.
("Capitol") and all of its affiliated and related entities (collectively with
Capitol, "Company") on the other hand, both of which are sometimes collectively
referred to as the "Parties" and is made with reference to the following:
1. RECITALS:
a) Capitol is a Plaintiff and MP3 is the defendant in the following
litigation (the "Litigation") pending in the United States
District Court for the Southern District of New York captioned
UMG RECORDINGS, INC., SONY MUSIC ENTERTAINMENT INC., WARNER
BROS. RECORDS INC., ARISTA RECORDS INC., ATLANTIC RECORDING
CORPORATION, BMG MUSIC D/B/A THE RCA RECORDS LABEL, CAPITOL
RECORDS, INC., ELEKTRA ENTERTAINMENT GROUP, INC., INTERSCOPE
RECORDS, AND SIRE RECORDS GROUP INC., Plaintiffs, vs. XX0.XXX,
INC., Defendant, Case Xx. 00 Xxx. 0000 (XXX). Each of the
Parties to this Settlement Agreement desires to permanently
settle and resolve any and all claims, disputes, issues or
matters that exist between them as of the date of this
Settlement Agreement as to the XxXX0.xxx service as set forth
below and to dismiss with prejudice the Litigation.
b) NOW, THEREFORE, in consideration of the mutual promises,
covenants and agreements set forth herein, and subject to the
terms and conditions set forth below, the Parties desire to, and
hereby do, resolve their differences and agree as follows:
2. SETTLEMENT TERMS:
a) In consideration hereof, concurrently with the execution hereof
and of the License Agreement referred to in subparagraph (e) of
this Section 2 below, and the execution and filing of the
Dismissal With Prejudice of the Litigation as described
hereinbelow, MP3 will pay Company's Virgin Holdings, Inc.
affiliate an amount equal to [...***...] (the "EMI Amount"),
plus [...***...] by wire transfer of immediately available funds
to an account designated by Company.
b) [...***...]
* CONFIDENTIAL TREATMENT REQUESTED
1
2
i) [...***...]
* CONFIDENTIAL TREATMENT REQUESTED
2
3
ii) [...***...]
a) BMG Entertainment, - [...***...];
b) Warner Music Group, Inc. - [...***...];
c) UMG Recordings, Inc. - [...***...]; and
d) Sony Music Entertainment, Inc. - [...***...].
iii) [...***...]
iv) [...***...]
* CONFIDENTIAL TREATMENT REQUESTED
3
4
v) [...***...]
vi) [...***...]
c) [...***...]
* CONFIDENTIAL TREATMENT REQUESTED
4
5
d) [...***...]
e) Concurrently herewith, Company and MP3 are entering into a
License Agreement with respect to, inter alia, the licensing to
MP3 of the right to stream master recordings controlled by
Company via the MyMP3 service(the "License Agreement").
3. RELEASES
a) Company Release. Company, on behalf of itself and its agents,
employees, representatives, partners, owners, officers, parents,
shareholders, directors, subsidiaries, affiliates, attorneys,
transferees, predecessors, successors, and assigns, solely to
the extent it can legally bind such entities, does hereby
irrevocably release, acquit and forever discharge MP3 and each
of its agents, employees, representatives, partners, owners,
related entities, officers, parents, shareholders, directors,
subsidiaries, affiliates, attorneys, transferees, predecessors,
successors, and assigns, jointly and severally (the "MP3
Releasees"), of and from any and all debts, suits, claims,
actions, causes of
* CONFIDENTIAL TREATMENT REQUESTED
5
6
action, controversies, demands, rights, damages, losses,
expenses, costs, attorneys' fees, compensation, liabilities and
obligations whatsoever (hereinafter referred to collectively as
"Claims"), suspected or unsuspected, known or unknown, foreseen
or unforeseen, arising at any time up to and including the date
of this Settlement Agreement, which Company may now have or at
any time heretofore may have had, or which at any time hereafter
may have or claim to have against the MP3 Releasees, solely to
the extent they relate to, arise from, or concern the XxXX0.xxx
service up to the date hereof, the Litigation or the subject
matter thereof and with respect to the Compositions and sound
recordings included in the XxXX0.xxx service as of the date
hereof (hereinafter "Company's Released Claims"). Nothing
contained in the Release is intended to release any claims for
any activity of MP3 occurring after the date of this agreement
nor for any Licensed Performances.
b) MP3 Release. MP3, on behalf of itself and its agents, employees,
representatives, partners, owners, related entities, officers,
parents, shareholders, directors, subsidiaries, affiliates,
attorneys, transferees, predecessors, successors, and assigns,
solely to the extent it can legally bind such entities, does
hereby irrevocably release, acquit and forever discharge Company
and each of its agents, employees, representatives, partners,
owners, related entities, officers, parents, shareholders,
directors, divisions, subsidiaries, affiliates, attorneys,
transferees, predecessors, successors, and assigns, jointly and
severally (the "Company Releasees"), of and from any and all
Claims, suspected or unsuspected, known or unknown, foreseen or
unforeseen, arising at any time up to and including the date of
this Settlement Agreement, which MP3 may now have or at any time
heretofore may have had, or which at any time hereafter may have
or claim to have against the Company Releasees, relating to,
arising from, or concerning the MyMP3 service, the Litigation or
the subject matter thereof and any counter claims which MP3
could have asserted in connection with the Litigation
(hereinafter "MP3's Released Claims").
c) Statutory Waiver. Company's Released Claims and MP3's Released
Claims are collectively defined as the "Released Claims". With
respect to the Released Claims, all rights under California
Civil Code Section 1542 (and any other law of similar effect),
are hereby expressly waived by the Parties, and each of them,
notwithstanding any provision to the contrary. Section 1542
provides as follows:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor
at the time of executing the Release, which if known by
him must have materially
6
7
affected his settlement with the debtor."
d) The Parties, and each of them, and their representatives, and
assigns expressly waive and release any right or benefit which
they have or may have under Section 1542 of the Civil Code of
the State of California, to the fullest extent that they may
waive all such rights and benefits pertaining to the matters
released herein. It is the intention of the Parties, and each of
them, through this Settlement Agreement, and with the advice of
counsel, to fully, finally and forever settle and release all
such matters, and all claims relative thereto, in furtherance of
such intention.
e) Dismissal With Prejudice. Company, concurrently with the
execution and delivery hereof and payment of the EMI Amount and
the Advance payable under the License Agreement shall execute
and deliver to MP3 a Dismissal With Prejudice of the Litigation,
which MP3 shall file, in the form annexed hereto as Exhibit A.
4. NOTICES
a) Any notice, demand, request, consent, approval, or communication
that either Party desires or is required to give to the other
Party is to be addressed and served on or delivered to the other
Party at the address set forth below. Any Party may change its
address by notifying the other Party of its change of address in
writing.
i) The addresses for MP3 are as follows:
XX0.xxx, Inc.
0000 Xxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
Attn: General counsel and VP Legal
With simultaneous copies to:
Xxxx Xxxxxxxxxx, Esq.
Ziffren, Brittenham, Branca & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx 00000
ii) The address for Company is as follows:
EMI Recorded Music - North America
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
7
8
Attn: Xxxxxxxx XxXxxxxx, Vice President Legal Affairs
With simultaneous copy to:
EMI Recorded Music, New Media
0000 Xxxxx Xxxx Xxxxxx
XX Xxxxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Vice President, Business and
Legal Affairs
5. MISCELLANEOUS PROVISIONS
a) By entering into this Settlement Agreement, no Party admits or
acknowledges that they committed any wrongdoing on their part.
b) This Settlement Agreement and any controversy which might arise
therefrom shall in all respects be interpreted, enforced and
governed by the laws of the State of New York applicable to
agreements made and to be fully performed therein. All parties
consent to the sole and exclusive personal jurisdiction and
venue in the United States District Court for the SDNY, or if
federal jurisdiction is unavailable, in the Supreme Court of the
State of New York located in New York County, and agree that all
disputes or litigation regarding this Settlement Agreement shall
be submitted to and determined by said court, which shall have
sole and exclusive jurisdiction. Subsequent changes in New York
law or federal law through legislation or judicial
interpretation that creates or finds additional or different
rights and obligations of the Parties shall not affect this
Settlement Agreement.
c) This Settlement Agreement, together with the License Agreement,
is the entire agreement between the Parties with respect to the
Released Claims or subject matter of this Settlement Agreement
and supersedes all prior and contemporaneous oral and written
agreements and discussions pertaining to the Released Claims or
subject matter of this Settlement Agreement. This Settlement
Agreement may be amended only by a written agreement executed by
each of the Parties hereto. No breach of the License Agreement
may or shall be deemed a breach of this Settlement Agreement
other than failure to pay the advance due thereunder.
d) No breach of any provision, representation or warranty
("Provision") hereof can be waived unless in writing signed by
the party to be charged with such a waiver. Waiver of any one
breach of any Provision hereof shall not be deemed to be a
waiver of any other breach of the same or any other Provision
hereof.
e) This Settlement Agreement shall be binding upon and inure to the
benefit of
8
9
the Parties hereto and its respective agents, employees,
representatives, partners, parents, subsidiaries, divisions,
affiliates, officers, related entities, licensees, directors,
shareholders, investors, attorneys, transferors, transferees,
predecessors, successors, trustees in bankruptcy, and assigns
and each and every entity or person which now or during the
pendency of the Litigation was a division, parent, successor,
predecessor, division, affiliate, officer, director,
shareholder, investor, employee, attorney, transferor,
transferee, or subsidiary for each Party and its respective
legal successors and assigns, to the extent each party can bind
such parties.
f) The Parties represent and warrant that each of them have not
assigned all or any portion of any claim pertaining to the
Released Claims to any person or entity. In the event any claims
are made by any third persons or entities based upon any
purported assignment or any such liens or claims are asserted in
connection with the Released Claims or proceeds of the
Settlement Agreement, then the Party who has breached his
representation or warranty contained in this Section 5(f) agrees
to indemnify and hold harmless the other Party from any said
claims being made.
g) In the event that any covenant, condition or other provision
herein contained is held to be invalid, void or illegal by any
court of competent jurisdiction, the same shall be deemed
severable from the remainder of this Settlement Agreement and
shall in no way affect, impair or invalidate any other covenant,
condition or other provision herein contained. If such
condition, covenant or other provisions shall be deemed invalid
due to its scope or breadth, such covenant, condition or other
provision shall be deemed valid to the extent of the scope or
breadth permitted by law.
h) Each of the Parties hereto represent and declare that in
executing this Settlement Agreement, it has relied solely upon
its own judgment, belief and knowledge, and on the advice and
recommendations of its own independently selected counsel,
concerning the nature, extent and duration of its rights and
claims and that it has not been influenced to any extent
whatsoever in executing the same by any representations or
statements covering any matters made by the other Party hereto
or by any person representing it.
i) The Parties hereto and each of them, further represent and
warrant that they have carefully read this Settlement Agreement
and know and understand the contents hereof, and that they
signed this Settlement Agreement freely and voluntarily and have
had the benefit of the advice of legal counsel before executing
this Settlement Agreement. Each of the representatives executing
this Settlement Agreement on behalf of their respective
corporations or partnerships is empowered to do so and thereby
binds his respective corporation or partnership. The Parties
hereto acknowledge and agree that
9
10
this Settlement Agreement shall be deemed to have been drafted
jointly by the Parties hereto. Ambiguities shall not be
construed against the interest of either party by reason of it
having drafted all or any part of this Settlement Agreement.
j) This Settlement Agreement may be executed in counterparts and
when each Party has signed and delivered at least one such
counterpart to the other Party, each counterpart shall be deemed
an original, and all counterparts taken together shall
constitute one and the same agreement, which shall be binding
and effective as to all Parties. This Settlement Agreement may
be executed via facsimile signatures, which shall have the same
force and effect as if they were original signatures to be
followed by executed originals.
k) Each party hereto represents and warrants that it has all
necessary right, title, and authority to enter into this
Settlement Agreement, to grant the rights and interests herein
granted, and to perform all of its obligations under this
Settlement Agreement.
l) The provisions and existence of this Settlement Agreement (a)
may not be cited by any party hereto as an admission of any
issue of fact or law; and (b) shall not be disclosed to any
third party or entity, except (i) as required by law or
regulation or to enforce the terms hereof, (ii) to the parties
respective professional advisors and executives on a "need to
know" basis, provided that such parties agree to be bound by
these confidentiality provisions, and (iii) to the Internal
Revenue Service, or any state or municipal taxing authority or
other regulatory body having jurisdiction. The parties may also
disclose these terms as required in connection with stock
exchange, shareholder, internal, governmental or regulatory
requirements, or external audit or similar disclosure
requirements. [...***...] It is understood and agreed that if
the foregoing provision is breached by any party hereto, the
non-breaching party may be entitled to injunctive or other
equitable relief to prevent such a breach. Any non-breaching
party seeking such injunctive relief will not be obligated to
secure any bond or give any security in connection with the
application for such relief. The right to seek injunctive relief
under this paragraph shall be in addition to all other rights,
remedies and forms of relief which may be available. In
furtherance of the foregoing, any and all press releases
relating to the subject matter hereof shall not be released
until the timing and contents of such press release has been
approved in writing by Company's Vice President, Legal Affairs;
provided, the parties agree that a press release with respect to
this Settlement Agreement shall be mutually agreed and issued
within a reasonable period after execution hereof, and in any
event within any time frame required by law or regulation.
* CONFIDENTIAL TREATMENT REQUESTED
10
11
IN WITNESS WHEREOF, the Parties hereto have executed this Settlement
Agreement on the date(s) written beside its name, respectively.
Capitol Records, Inc.
Dated: 26 July 2000 By: /s/ Signature Illegible
Its: Secretary
Dated: 26 July 2000 XX0.xxx, Inc.
By: /s/ Xxxx Xxxxxx
Its: EVP & CFO
11
00
XXXXXX XXXXXX XXXXXXXX XXXXX
FOR THE SOUTHERN DISTRICT OF NEW YORK
------------------------------------------
UMG RECORDINGS, INC., SONY MUSIC
ENTERTAINMENT INC., CAPITOL RECORDS, INC., Case No.: 00 Civ. 0472 (JSR)
and INTERSCOPE RECORDS,
Plaintiffs,
v.
XX0.XXX, INC.,
Defendant.
------------------------------------------
STIPULATION OF DISMISSAL WITH PREJUDICE OF
PLAINTIFF CAPITOL RECORDS, INC.
Plaintiff Capital Records, Inc. and Defendant XX0.xxx, Inc. hereby stipulate
that all claims of plaintiff Capital Records, Inc. herein are dismissed with
prejudice, pursuant to rule 41 of the Federal Rules of Civil Procedure.
Plaintiff Capitol Records, Inc. and defendant XX0.xxx, Inc. shall bear their own
costs and expenses, including attorneys' fees.
Dated: New York, New York
July 28, 2000
XXXXXX & XXXXXX
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
(000) 000-0000
12
13
- and -
Hadrian X. Xxxx
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
(000) 000-0000
Counsel for Plaintiffs
Capitol Records, Inc.
XXXXXX GODWARD LLP
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxxxx X. Xxxxxx (MR-0426)
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
-and-
XXXXXX, XXXXXXXXXX & XXXXXXXXX LLP
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxxx (MC-6858)
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000
(000) 000-0000
Counsel for Defendant
XX0.xxx, Inc.
SO ORDERED.
Xxx /s/ Rakoff
----------------------------------------
Hon. Xxx Xxxxxx
7-28-00
13