Document:

Exhibit 10.12

 

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED BECAUSE IT IS BOTH (i) NOT MATERIAL, AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED

 

LICENSE AGREEMENT

 

This License Agreement (“Agreement”), dated           , 2018 is between Naxos International (Far East) Limited, a Hong Kong company, with its head office at Level 11, Cyberport 1, 1 Cyberport Road, Hong Kong (“Licensor”), and Naxos (Beijing) Culture & Communication Co., Ltd., a People’s Republic of China corporation, with offices at Building No.96, Yard No. 4,Sanjianfang-nanli, Chaoyang District, 100024, Beijing, PRC (“Licensee”).

 

RECITALS

 

WHEREAS, Licensor represents and warrants that it is free and clear to enter into this Agreement and that it has obtained the consent of all relevant rights owners to do so;

 

WHEREAS, Licensor represents and warrants that all costs of recording, musicians’ fees and other fees have been paid in full as required; and,

 

WHEREAS, Licensee represents and warrants that it can market, promote and exploit sound recordings to the secondary exploitation market,

 

Accordingly, the parties agree as follows:

 

1.                                      Definitions.  Terms defined in the preamble and the recitals of this Agreement have their assigned meaning, and the following terms have the meanings assigned to them:

 

1.1.                            “Content” has the meaning set forth in Section 3.

 

1.2.                            “Fields of Use” has the meaning set forth in Section 2.

 

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1.3.                            “Net Revenue” means all payments, sales proceeds or other monies directly received or credited to Licensee’s account for the exploitation of the Content less any tax deducted by a licensing client if applicable.

 

1.4.                            “Reporting Statement” has the meaning set forth in Section 6.

 

1.5.                            “Sub-Licensee” means any third party entering into any agreement with the Licensee with respect to any rights granted under this Agreement.

 

1.6.                            “Term” has the meaning set forth in Section 4.

 

1.7.                            “Termination Notice” has the meaning set forth in Section 10.1.

 

1.8.                            “Territory” means the People’s Republic of China, excluding the Hong and Macau special administrative regions and Taiwan

 

2.                                      Rights Granted.  Subject to the terms and conditions of this Agreement, the Licensor hereby grants to the Licensee the exclusive right to exploit the Content (as defined below) or to license third parties to use the Content in specific Fields of Use.  Fields of Use include the following:

 

a.                                      Synchronization with motion picture and television productions;

 

b.                                      Use in television or radio commercials;

 

c.                                       Sale in physical form if packaged with books or periodicals;

 

d.                                      Sale in physical form of special compilation not identical with compilations available on the Naxos, Marco Polo, Naxos World, Amadis, Capriccio, Dynamic, Altissimo, and any other Naxos-owned labels, provided the consent of the Licensor is first obtained;

 

e.                                       Any other reasonable use provided that the consent of the Licensor is first obtained;

 

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f.                                        Streaming or downloading by digital service providers, provided that all deals are specifically authorized by Licensor, reported via Licensor’s reporting system, and that content/data preparation and delivery fees are first deducted;

 

g.                                      Public performance of the recordings; and,

 

h.                                      Sale in digital and/or physical form of special compilations not identical with compilations available on the Naxos, Marco Polo, Naxos World, Amadis, Capriccio, Dynamic, Altissimo, and any other Naxos-owned labels, or local/national versions of existing albums or compilations on these labels, provided that the consent of the Licensor is first obtained.  This shall be facilitated by licensee submitting said compilations, along with the requisite artwork and in the standard format (as communicated by Licensor’s approved digital distributor) to said digital distributor.  For the sake of clarity, this authorization is specific to content delivered via Licensor’s approved digital distributor;

 

i.                                         Use in the telecommunications sector.

 

2.1.                            Where the prior consent of the Licensor is required, Licensor may refuse such consent at its discretion and shall not be required to advise the Licensee of any reasons for the refusal.

 

2.2.                            Licensor may withdraw some or all of the recordings or content, without notice, if it believes it is appropriate to do so to avoid any potential legal action from third parties regardless of whether or not there has been notice of any potential action given to the Licensor and regardless of the potential outcome of any such action were it to be pursued.

 

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2.3.                            Since the Licensor does not own the underlying musical works, the Licensee shall obtain the consent of the relevant owners of copyrighted musical works for all uses of the sound recordings and shall oblige any Sub-Licensee to do the same.

 

2.4.                            In the event any other obligations are to be met with respect to the use of the Content in the Territory and/or any other consents or payments required with respect to the use of the Content in the Territory, such obligations, consents and/or payments shall be the responsibility of the Licensee and/or any Sub-Licensee.

 

2.5.                            This license is subject to Licensee not representing any other Major Classical Music Catalogue.

 

3.                                      Content.  Content includes all sound recordings able to be sold in the Territory and that are now included in the Naxos, Marco Polo, Naxos World, Amadis, Capriccio, Dynamic, Ondine, Orfeo, Altissimo and other catalogs now owned or controlled or to be owned or controlled by Licensor in future.

 

3.1.                            Use of Recordings Synchronized with Pictures.  Licensee shall obtain the Licensor’s prior written consent before granting licenses for the use of recordings synchronized with pictures, featuring orchestras domiciled in the United Kingdom of Great Britain and in the United States.  Licensor does not own or control any underlying copyrighted musical works.

 

4.                                      Term.  The Term of this Agreement shall be from January 1, 2020 to December 31, 2022.  This Agreement shall automatically renew for additional three (3) year periods unless either party gives a six (6) months written notice of intent to terminate prior to the expiration of the term or any renewal thereof.  For the sake of clarity, the use of the Content by the Licensee before the date of execution of this Agreement but within the Term expressed within this Agreement shall be subject to the terms of this Agreement as such being the intent of the parties when the Content was used by the Licensee.

 

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5.                                      Royalties.  Licensee shall pay Licensor [redacted] of all Net Revenue received by Licensee for all Fields of Use.  In the case where an Agent or an affiliated company of Licensee is involved, Licensee shall pay Licensor [redacted] the Net Revenue received from the Agent or affiliated company.  If withholding tax is payable on amounts due to Licensor, such cost shall be split evenly between Licensee and Licensor.

 

6.                                      Payment Terms.  Licensee shall pay Licensor every half year within thirty (30) days from the end of June / December whereas such payments shall be based on payments actually received by Licensee from customers in the preceding 6 months.  Each payment must be accompanied by a statement (“Reporting Statement”) detailing activity in the quarter including but not limited to contracts entered into during the preceding half year, the amounts received by Licensee, the amounts outstanding, the rights licensed and the names and other details of the users.  The Licensee shall also provide the Licensor with a list of all accounts receivable regardless of whether or not such receivables arose in the previous half year as well as any other information requested by Licensor from time to time.  For the sake of clarity, the amount due to the Licensor shall be based upon the value of the actual contracts entered into as set out in the Reporting Statement and become earned by the Licensor when the Reporting Statement is released and not before.  In the absence of any Reporting Statement, the amount taken to be earned by the Licensor shall be equal to any payments received by the Licensor from the Licensee, such amounts taken to be earned at the time that the payment is received and not before.

 

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6.1.                            Currency.  The due payments shall be settled according to this Section 6 in Renminbi, the currency of The People’s Republic of China (“RMB”). Licensee shall make the payments in US Dollars or other foreign currency agreed by both parties, after converted from Renminbi based on the exchange rate on settlement day.

 

7.                                      Obligations of Licensor.  Licensor shall supply samples of the sound recordings in physical or digital form.  Licensor shall provide Licensee with user names and passwords for access to the naxos.com, naxosmusiclibrary.com, naxospokenwordlibrary.com, NaxosWorks, Naxos World and other websites operated by Licensor for the Licensee’s use, or its Agents or potential Sub-Licensees.  Licensor shall inform Licensee at regular intervals of any new sound recordings that are available to Licensee for secondary exploitation.

 

8.                                      Obligations of Licensee.  Licensee shall employ qualified sales and marketing persons and shall participate in all relevant conferences and conventions.  Licensee shall bear the costs associated with the employment of the sales and marketing persons and the participation in the conferences and conventions.  Licensee may appoint Agents to assist in the marketing and sale of the sound recordings.

 

9.                                      Audits.  Licensor may audit the Licensee’s accounts and the Licensee agrees to keep accurate and complete records for auditing purposes.  Licensor shall give Licensee a ten (10) day written notice of its intent to audit Licensee’s account.  Should the audit reveal a shortfall greater than ten percent (10%), Licensee shall bear the cost of the audit and Licensor shall have the right to terminate this Agreement.  Should the audit reveal a shortfall less than ten percent (10%) or any excess payments, Licensor shall bear the cost of the audit.

 

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10.                               Termination.  This Agreement shall terminate upon the occurrence of any of the following:

 

10.1.                     Licensor may terminate this Agreement immediately by serving notice on Licensee that this Agreement is terminated (“Termination Notice”), such termination to be effective from the delivery of notice to the registered office of Licensee or its place of business, should:

 

i.                                         Licensee be placed in administration or receivership or go bankrupt;

 

ii.                                     Licensee appoint or have appointed an Administrator, Receiver or Trustee in Bankruptcy;

 

iii.                                 Licensee appoint or have appointed a Receiver or Conservator for any property of Licensee;

 

iv.                                  Licensee commit an act of insolvency or bankruptcy; or

 

v.                                      Any changes in the beneficial ownership of the Licensee occur.

 

10.2.                     If Licensor serves notice on Licensee that Licensor believes Licensee is insolvent and Licensee fails to provide Licensor with conclusive evidence that Licensee is not insolvent within fourteen (14) days of receipt of such notice, Licensor may terminate this Agreement by serving a Termination Notice on the Licensee, such termination to be effective from the delivery of notice to the registered office of the Licensee or its place of business.  Licensor and Licensee agree that in determining whether or not Licensee is insolvent, contingent liabilities should be regarded as though they are actual liabilities and that Licensor shall be the conclusive determiner of the adequacy of any evidence provided by the Licensee as to whether or not Licensee is insolvent.

 

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10.3.                     In the event of a breach of this Agreement by the Licensee, Licensor may immediately terminate this Agreement by providing written notice to the Licensee that the Agreement is terminated, such termination to be effective from the delivery of notice to the registered office of the Licensee or its place of business.

 

11.                               Effect of Termination.

 

11.1.                     On Termination, Licensee agrees all agreements it has with any customers or agreements to be entered into with customers shall be considered assigned or transferred to Licensor or such other company as Licensor shall specify in the Termination Notice.

 

11.2.                     Licensee acknowledges that on Termination the immediate assignment of agreement with customers or agreements to be entered into is necessary and an award of damages would not provide adequate compensation for any loss or damages suffered by Licensor.

 

11.3.                     Licensee shall immediately deliver all customer and client files to Licensor or such other party as Licensor may nominate.  Further, Licensee shall immediately take such other action as reasonably required by Licensor.

 

11.4.                     Licensee agrees Licensor may provide Termination Notice or such other written notice as Licensor believes appropriate to customers or entities with whom agreements are to be entered advising that this Agreement with Licensee has been assigned to Licensor or such other company as Licensor may nominate in the written notice.

 

12.                               Assignment.  This Agreement may not be assigned by either party; provided, however, that Licensor may, without requiring consent of the other party, assign its rights and obligations under this Agreement to its holding company, or to any holding or subsidiary or associated company of its holding company or to any company acquiring substantially all the undertakings or assets of Licensor or its holding company or subsidiaries or associate companies; provided further, however, Licensor’s rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction.  Any purported assignment in violation of the preceding sentence shall be void.  For the purpose of this Section, an “associated company” shall mean a company which is associated with another company either through holdings of shares to an extent of not less than twenty five percent (25%) of its equity share capital or through common directors to an extent of not less than one third for the time being of the total number of directors.

 

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13.                               Partial Invalidity.  If any of the terms and conditions or provisions of this Agreement are determined invalid, unlawful or unenforceable to any extent, such term, condition or provision shall be severed from the remaining terms, conditions and provisions which shall continue to be valid to the fullest extent permitted by law.  The illegality, invalidity or unenforceability of any provision in this Agreement under any law shall not affect its legality, validity or enforceability under any other law nor the legality, validity or enforceability of any other provisions of this Agreement.

 

14.                               Indulgence.  Any time or indulgence or any waiver by the parties of any terms or conditions of this Agreement shall not affect any of the rights under this Agreement nor shall it be deemed a waiver of any continuing breach of the term or condition or breach of other terms or conditions of this Agreement or subsequent breach of such term or condition.

 

15.                               Jurisdiction.  This Agreement shall be governed by, and construed in all respects, in accordance with the laws of Hong Kong SAR.  Each party irrevocably submits to the non-exclusive jurisdiction of Hong Kong SAR courts and waives any objection to proceedings in such courts on the grounds of venue or inappropriate forum.

 

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16.                               Licensee will prepare a Chinese translation of this agreement. In case of discrepancies between the translation and the original English-language document, the provisions and language of the original English-language document shall prevail.

 

IN AGREEMENT WHEREOF the parties hereto have executed this Agreement:

 

	
Licensor
    	
 
    	
Licensee
    
	
Naxos International (Far East) Limited
    	
 
    	
Naxos (Beijing) Culture &   Communication Co., Ltd.
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Klaus HEYMANN
    	
/s/ Seal
    	
 
    	
By:
    	
/s/ YU He
    	
/s/ Seal
    
	
Authorized Signatory
    	
 
    	
Authorized Signatory
    
	
Klaus HEYMANN
    	
 
    	
YU He
    
	
Director
    	
 
    	
President
    
	
 
    	
 
    	
 
    
	
26 October, 2018
    	
 
    	
2018.10.11
    
	
Date
    	
 
    	
Date
    
	
 
    	
 
    	
 
    
	
Hong Kong
    	
 
    	
 
    
	
Place
    	
 
    	
Place
    
							

 

10Exhibit 10.13

 

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED BECAUSE IT IS BOTH (i) NOT MATERIAL, AND (ii) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED

 

DIGITAL DISTRIBUTION AGREEMENT 
 COVER SHEET 
 Between Naxos China and Licensor 
 Effective Date: January 1, 2017

 

Company: Naxos (Beijing) Culture & Communication Co., Ltd. (“Naxos China”)

Head office address: Building No. 96, Yard No. 4, Sanjianfangnanli

Chaoyang District, 100024, Beijing, PRC

Represented by Patricia Sun, CEO

 

	
Licensor:
    	
NAXOS OF AMERICA, INC.   (“Licensor”)
   1810 Columbia Avenue, Suite 28
   Franklin, TN 37064
   Tel: 615-465-3809
   E-mail: jvandriel@naxosusa.com
    
	
 
    	
 
    
	
Contact:
    	
Jeff Van Driel
    

 

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Article I.                                              TERMS AND CONDITIONS

 

Article II.                                         FOR DIGITAL DISTRIBUTION OF LICENSOR’S CONTENT

 

The following, dated as of August 1, 2016 (the “Effective Date”), when signed by NAXOS OF AMERICA, INC. (“Licensor”) and NAXOS (BEIJING) CULTURE & COMMUNICATION CO., LTD. (“Naxos China”) shall constitute the agreement (the “Agreement”) whereby Licensor grants to Naxos China the right to digitally distribute Licensor’s Content (hereafter defined).

 

Capitalized terms are defined on Schedule 1 attached to these Terms and Conditions.

 

1.                                      Term: The term of the Agreement shall be for two (2) years (the “Initial Term”). The Initial Term shall automatically renew for successive one (1) year periods (the “Renewal Term”). After the Initial Term, either Party may terminate the Agreement upon ninety (90) days written notice to the other. The Initial Term and Renewal Term(s), if any, are collectively referred to as the “Term.”

 

2.                                      Territory: MAINLAND CHINA, subject to any album-specific territory restrictions indicated by Licensor on Exhibit A or through XML/DDEX transmission to Naxos China.

 

3.                                      Grant of Rights: Licensor hereby grants Naxos China the following rights in and to the Content during the term throughout the Territory:

 

a.                                      The electronic, digital and mobile rights in the Content to create digital and electronic copies and to copy, reproduce, display, publicly perform, host, distribute, sell and transmit the Content via all electronic, digital and mobile platforms owned or controlled by Naxos China Retailers. Mobile platforms and mobile delivery as used in this agreement refers to the method of transmission of the Content delivered “over-the-air,” or by way of the internet, to a consumer’s personal portable device other than a personal computer. Naxos China shall be the sole entity authorized to provide Content to those Naxos China Retailers which Licensor approves in writing upon execution of the Agreement:

 

(i)                                          For retailers not authorized by Naxos hereunder on the Effective Date (each, an “Excluded Retailer”), Naxos, in its sole discretion, may elect to have Naxos China begin deliveries to these retailer(s) and the Parties shall work together to begin those deliveries as soon as practicable.

 

(ii)                                       For retailers not included as an Naxos China Retailer on the Effective Date (each, a “New Retailer”), Naxos China shall provide written notice of Naxos China’s intention to enter into a distribution arrangement with each New Retailer in writing and Licensor shall have thirty (30) days from the date of such notice to provide written notice, including via email, of its authorization for Naxos China to begin delivering Content to such New Retailer.

 

b.                                           Without limiting the foregoing, Licensor hereby grants to Naxos China the right throughout the Territory during the Term to:

 

(i)                                          release, advertise, distribute and sell electronic files or the equivalent electronic forms of the Content and to permit Naxos China Retailers to do so;

 

(ii)                                       print, publish, disseminate and otherwise use and permit Naxos China Retailers to use the NIL Materials for the purposes of trade, advertising and other exploitations solely in connection with the marketing, sale and exploitation of the Content. All NIL Materials provided by Licensor to Naxos China shall be deemed approved. All material provided by Licensor to Naxos China may be edited to fit the format of the specific use without further approval from Licensor.

 

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(iii)                                    sub-license the rights granted by Licensor to Naxos China in this Agreement as necessary to Naxos China Retailers solely to fulfill the purposes of this Agreement, including but not limited to those rights necessary to promote, market, advertise, distribute and sell the Content to consumers. Naxos China’s grant of rights to Naxos China Retailers or use of the Content shall always be subject to the terms and limitations of this Agreement;

 

(iv)                                   perform the Content in streaming format on: internet radio, social networking sites, websites owned or controlled by Naxos China Retailers, Naxos China’s website or other digital and internet outlets and, in that regard, to edit the Content into shorter works (as short as fifteen seconds [:15]) for the discovery and exploitation of the Content;

 

(v)                                      Paragraph purposefully removed;

 

(vi)                                   publicly display and make available as part of the exploitation of the Masters, the lyrics of the Compositions;

 

c.                                       Paragraph purposefully removed.

 

d.                                      In the event that Licensor loses rights in or to any Content such that it no longer has the rights necessary to authorize Naxos China Retailers to exercise any right provided herein, or Licensor receives notice of a third-party claim that Licensor does not have such rights (which claim Licensor reasonably deems to be of concern), it shall immediately notify Naxos China in writing of such loss or notice and shall be entitled to request that Naxos China withdraw such Content from further sale on all Naxos China Retailer sites. Upon receipt of such written notice from Licensor, Naxos China shall use commercially reasonable efforts to cease making the applicable Content available for further sale on Naxos China Retailer sites within five (5) business days after receipt of such notice.

 

4.                                      Payment

 

a.                                      Naxos China shall pay Licensor [redacted]

 

b.                                      For the purposes of this Agreement, “Revenue” means income actually received by or credited to Naxos China that is derived from the exploitation of the Content. Revenue that is received by Naxos China may have been subject to taxes, surcharges or fees imposed by government agencies or Naxos China Retailers before it is received by Naxos China, however, once received by Naxos China, there shall be no further deductions from Revenue unless otherwise noted. Naxos China shall have no obligation to pay Licensor for Revenue which Naxos China has not actually received until such time as Naxos China receives such Revenue.

 

c.                                       Revenue Shares shall be paid monthly by the last business day of each month following the month in which Revenue was received by Naxos China or the following business day if the last day falls on a weekend or holiday. Notwithstanding the foregoing, Revenue Shares mays be paid on a calendar quarterly basis by the last business day of each month following the month in which Revenue was received by Naxos China or the following business day if the last day falls on a weekend or holiday, but only during the first year of this agreement. Each payment will be accompanied by a detailed statement showing all sales and other Revenue-generating exploitations of the Content. If Licensor has not received payment or a statement indicating that no payment is due within five (5) business days of the due date, Licensor shall advise Naxos China that Licensor has not received payment or a statement. Naxos China shall investigate the situation and assure that payment or a statement is sent to Licensor. In no event shall Naxos China be deemed in breach of its payment obligations under the Agreement if Licensor has not received payment or a statement by the last day of the month, however, Naxos China may be deemed in breach of its payment obligations if Naxos China fails to make payments or provide a statement within ten (10) days of receiving notice from Licensor as outlined above.

 

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d.                                                No payment shall be made to Licensor in any month when less than [redacted] U.S. dollars ($[redacted]) is due and payable to Licensor. In the event payment is not made to Licensor for this reason, such amounts below [redacted] U.S. dollars ($[redacted]) will accrue to Licensor’s account and shall be paid in the first month in which Licensor’s account reflects a balance greater than [redacted] U.S. dollars ($[redacted]).

 

e.                                                 All payments to Licensor from Naxos China under the Agreement shall be made by wire transfer to the bank account specified by Licensor in United States Dollars, unless otherwise agreed upon between the Parties. Conversion of currencies to United States Dollars shall be made using the reporting month’s average inter-bank rate as the term is commonly know.

 

5.                                      Accountings & Audits

 

All statements shall be binding upon Licensor and not subject to objection by Licensor unless specific objection in writing, stating the basis thereof, is given to Naxos China within two (2) years from the date the statement is rendered. Licensor shall have two (2) years from the date each statement is rendered to conduct an inspection of Naxos China’s books and records specifically relating to Licensor’s sales and payment activity. Such inspection shall take place at the location where Naxos China normally keeps such books and records and shall be conducted during normal business hours. All such inspections shall be made upon a minimum of thirty (30) days prior written notice to Naxos China. Licensor may only inspect records relating to each statement once and may only conduct an inspection once a year. In the event that any such inspection reveals an underpayment of amounts due, Naxos China shall promptly pay any amounts owed, and in the event such underpayment exceeds ten percent (10%) of the amounts due, Naxos China shall reimburse Licensor for the reasonable and documented actual costs of such inspection. In accounting to Licensor, Naxos China shall have the absolute right to rely upon the statements it receives from third parties and shall not be liable in any manner whatsoever for any error. omission or other inaccuracy of any such statement(s) or information received by Naxos China, provided Naxos China does not know or has no reliable business reason to know of an error, omission or other inaccuracy in such third party statement or information.

 

6.                                      Confidentiality

 

a.                                      Naxos China and Licensor shall keep the terms and conditions of the Agreement confidential both during the Term and thereafter, and shall not disclose any information concerning the terms and conditions of the Agreement to any other person or entity. Each Party may refer generally to the existence of the Agreement but shall not reveal the terms and conditions of the Agreement, including but not limited to the payment provisions, other confidential information, proprietary information, business plans, business models, customers, clients, technology, products or any other information which either Party identifies as confidential (collectively, the “Confidential Information”) without the prior written consent of the other Party. Either Party may disclose the Confidential Information on a “need to know” basis to its attorneys, financial and other advisors who are under a duty of confidentiality to the disclosing Party without the prior written consent of the other Party so long as those agents are informed of this Confidentiality provision and agree to be bound by it and maintain the Confidential Information confidential. If required by law or governmental regulation, either Party may disclose the Confidential Information only after it provides the other Party with notice of the potential disclosure and the other Party has the opportunity to narrow the information to be disclosed or dispute the disclosure.

 

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b.                                                Neither Licensor nor Naxos China shall make or issue any public statement or press release regarding this Agreement or its subject matter without the prior written approval of the other Party.

 

7.                                      Representations and Warranties

 

a.                                      Licensor represents and warrants that:

 

(i)                                     Licensor has the full right, power and authority to enter into and fully perform all of its obligations under the Agreement and to grant Naxos China the rights granted in the Agreement, including the rights to use the Content as authorized in the Agreement. Licensor possesses all rights in and to the Content to authorize Naxos China to exploit the Content as granted in the Agreement. Licensor has not granted and will not grant or attempt to grant to any other person, firm, corporation or entity rights of any kind which would in any way impair the rights granted to Naxos China under the Agreement;

 

(ii)                                  The Content contains no unauthorized Samples;

 

(iii)                               The Content and the sale, distribution and exploitation of the Content, the NIL Materials, the Releases (as applicable) and any uses of the Content, the NIL Materials and the Releases as authorized in the Agreement shall not violate any law or infringe upon any common law or statutory rights of any third party, including without limitation contractual rights, copyrights, trademarks and rights of privacy or publicity of any party;

 

(iv)                              Licensor has obtained all licenses, permissions and other rights necessary for the authorized uses of the Content, the NIL Materials and the Releases (as applicable) under the Agreement;

 

(v)                                 Notwithstanding Section 7(b)(iii), Licensor shall make any and all payments due to artists, producers, musicians, Performers, and applicable unions, guilds, collectives, other groups and all other third parties whose performances are embodied on the Content and on all artwork submitted by Licensor.

 

b.                                      Naxos China represents and warrants that:

 

(i)                                     Naxos China has the right, power and authority to enter into and fully perform its obligations under the Agreement;

 

(ii)                                  Naxos China shall, at its sole cost and expense, encode and deliver the Content to be distributed to Naxos China Retailers;

 

(iii)                               Naxos China shall be responsible for any and all obligations due to performing rights societies, publishers, writers, composers, etc. for any usage of content authorized under the terms of this agreement.

 

8.                                      Indemnification

 

Each Party (the “Indemnifying Party”) will indemnify, defend and hold harmless the other Party and its affiliates, their respective officers, directors, employees and agents (“Indemnified Party”) from and against any and all losses, liabilities, claims, obligations, costs and expenses (including reasonable outside attorneys’ fees) which result from or arise in connection with or are related in any way to a third party claim resulting from a breach by the Indemnifying Party of any of its representations and warranties in the Agreement; provided such claim has been reduced to a final judgment or settled with the Indemnifying Party’s written consent, not to be unreasonably withheld.

 

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9.                                      Termination

 

a.                                           The Agreement may be terminated upon notice to the other Party if a Party becomes insolvent or makes an assignment for the benefit of creditors, or if proceedings in voluntary or involuntary bankruptcy are instituted on behalf of or against a Party or, if a receiver or trustee of a Party’s property is appointed.

 

b.                                           During the Term, Licensor may upon thirty (30) days written notice to Naxos China terminate the Agreement with respect to any particular piece of Content without effecting the Agreement for the remaining Content; provided,  however, that in the event the Content is being terminated or removed from an Naxos China Retailer and Naxos China is obligated to provide a longer time-frame for removal of Content, Naxos China shall so advise Licensor and Licensor shall afford Naxos China the period of time to which it is bound without being in breach of this provision or the Agreement, but in no event shall such period exceed ninety (90) days.

 

c.                                            Upon termination or expiration of the Agreement for any reason, the rights granted to Naxos China under the Agreement shall automatically revert to Licensor, and Naxos China shall cease all use and distribution of the Content and shall demand that Naxos China Retailers cease all use and distribution of the Content. Naxos China shall promptly delete all forms of the Content from its website and demand that Naxos China Retailers delete all forms of Content from their websites within ninety (90) days of termination of the Agreement.

 

10.                               Survival of Revenue

 

Upon expiration or termination of the Agreement, all Revenue received by Naxos China for the Content shall continue to be subject to the payment provisions outlined in the Agreement for so long as Naxos China receives such Revenue. After termination or expiration of the Agreement, the minimum payment threshold referenced in the payment provision of the Agreement shall not apply and Naxos China shall pay Licensor its percentage of all Revenue received regardless of the amount payable. In the event that Naxos China receives any residual Revenue post-termination, and after the final payment is made to Licensor, Naxos China shall send any statements and payments due to Licensor for said residual Revenue on a semi-annual basis (i.e. within 5 business days of June 30th and December 31st of each year).

 

11.                              Governing Law, Consent to Jurisdiction.

 

This Agreement will be governed by the laws of the State of Tennessee, without reference to rules governing choice of laws or the U.N. Convention on Contracts for the International Sale of Goods. Naxos China hereby irrevocably consents and waives any objection to the exclusive jurisdiction and venue of the federal and state courts located at Davidson County, Tennessee with respect to any claims, suits or proceedings arising out of or in connection with this Agreement or the transactions contemplated hereby.

 

12.                              Distribution Procedure

 

Naxos China will make best efforts to accept all sound recordings and other materials submitted by Licensor. Naxos China will work with Licensor and Naxos China Retailers to facilitate as many of Licensor’s preferences as possible.

 

13.                              Miscellaneous

 

a.                                           If any part of the Agreement is deemed invalid or unenforceable, it shall not affect the validity or enforceability of the remainder of the Agreement, which shall remain in full force and effect as if such invalid or unenforceable provision were not a part hereof.

 

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b.                                      The Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective heirs, executors, successors in interest and assigns.

 

c.                                       In entering into and performing the Agreement, Licensor and Naxos China each have the status of independent contractors. The Agreement shall not be deemed to create a partnership or joint venture between the Parties and neither is the other’s partner or employee.

 

d.                                      This Agreement contains the entire understanding between the Parties with respect to the subject matter of the Agreement. The Agreement supersedes and replaces any prior oral or written agreements or understanding between the Parties. The Agreement may only be modified, altered or amended by a written agreement signed by all Parties. For purposes of this provision, a written modification, alteration or amendment shall include e-mail transmission with proof of receipt and acceptance by the receiving Party.

 

e.                                       Licensor agrees that it enters into the Agreement with all knowledge of its terms, freely and voluntarily and with a complete understanding of all the consequences of entering into the Agreement. Licensor acknowledges that it has been represented in the negotiation and execution of the Agreement by an independent attorney of Licensor’s choice who is familiar with the practices of the entertainment and new media industry or Licensor has willingly refrained from so doing.

 

f.                                        This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee without giving effect to any choice of law principles.

 

g.                                       All notices and communication desired or required between the Parties may be made via e-mail transmission; provided,  however, that the sending Party obtain proof of receipt of such communication by the recipient either by return letter, e-mail or fax. Notices that relate to any claim referenced in the Indemnification provision as well as all notices of termination shall be given in writing and delivered either personally or via an overnight commercial carrier which provides proof of delivery all with the charges prepaid by the sender.

 

h.                                      This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of a signed counterpart of a signature page to this Agreement by facsimile or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Both Parties have read these Terms and Conditions and agree to be bound by them.

 

	
Licensor
    	
Naxos China
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ Jeff Van Driel
    	
 
    	
By:
    	
/s/ Patricia Sun
    
	
NAXOS OF AMERICA, INC.
    	
NAXOS (BEIJING) CULTURE &   COMMUNICATION CO., LTD
    
	
 
    	
d/b/a NAXOS CHINA
    
	
 
    	
 
    
	
Jeff Van Driel
    	
Patricia Sun
    
	
CEO
    	
CEO
    
					

 

7

 

Schedule 1

 

Definitions

 

Capitalized words and phrases in the Agreement have the following meanings. Not all defined terms may apply to all services:

 

This or the “Agreement” means the Terms and Conditions and all Schedules, Exhibits and Addenda.

 

“Album” means a specific collection of Content compiled for sale and presentation as a unit and indicated on Exhibit A or as delivered via FTP with the accompanying metadata territory authorizations.

 

“Compositions” means the compositions embodied on the “Masters” as well as the copyrights in and to the Compositions.

 

“Content” means the Masters and the Compositions. collectively or in any combination which Licensor submits to Naxos China.

 

“Download” means a digital transmission of a download of the Content to a local storage device (e.g., the hard drive of the user’s computer or a portable device), whether subject to time or use limitations or not or whether permanently available for listening an unlimited number of times (unless deleted by the user) or available for a limited period for listening a limited number of times.

 

“Effective Date” means the date the Agreement between Naxos China and Licensor goes into effect as indicated on the first page of the Agreement and which may or may not be the date on which the Parties execute the Agreement.

 

“Initial Term” means two (2) year from the Effective Date of the Agreement.

 

“Naxos China Retailer” means all authorized retailers with whom Naxos China has agreements during the Term for the distribution and exploitation of content to consumers, excluding the Excluded Retailers.

 

“Licensor” means the entity described on the first page of the Agreement who owns or controls the Content.

 

 “Masters” means the sound recordings as well as the copyright in and to the sound recordings as provided.

 

“New Retailer” means an entity that is not an Naxos China Retailer or an Excluded Retailer and with whom Naxos China intends to enter into an agreement during the Term for the distribution and exploitation of content to consumers.

 

“NIL Materials” means the approved likeness, biography, photos and other approved promotional materials provided by Licensor. including the professional name use by Licensor and the names of others whose work is embodied on the Content, including the Performer.

 

“Party” means the two entities that enter into the Agreement. including Naxos China and Licensor as described on page one of the Agreement.

 

“Performer” means any person whose musical, vocal, production services or photographic services, including video photographers and editors, as well as any director, producer, actor or speaker whose work is embodied on the Content.

 

8

 

“Proprietary Materials” means the persons, places, names, likenesses, images, works of art, trademarks, logos and subjects which appear on the Visuals.

 

“Release” means all the permissions, in writing, required for use of the Proprietary Materials under the Agreement.

 

“Renewal Term” means the successive one (1) year periods after the Initial Term which are automatic immediately upon the expiration of the Initial Term, unless either Party terminates after the Initial Term.

 

“Retail Marketing” means a marketing campaign agreed upon by the Parties, including placements on the home page, feature page, genre specific pages or the like of Naxos China Retailers.

 

“Revenue” means income actually received by or credited to Naxos China that is derived from the exploitation of the Content. Revenue that is received by Naxos China may have been subject to taxes, surcharges or fees imposed by government agencies or Naxos China Retailers before payment is received by Naxos China, however, once received by Naxos China, there shall be no further deductions from Revenue unless otherwise noted. Naxos China shall have no obligation to pay Licensor for Revenue which Naxos China has not actually received until such time as Naxos China receives such Revenue.

 

“Samples” means any portion or interpolation of a third-party master recording or composition, video or other material, or portions thereof whether musical, lyrical or otherwise, not owned or controlled by Licensor.

 

“Strategic Marketing” means a marketing campaign agreed upon by the Parties in which Naxos China will work with the Licensor to create a marketing plan that increases impressions for a particular release and includes, in addition to the Retail Marketing activities, a presence on blogs, online marketing sites and other non-traditional retail outlets.

 

“Streaming” means a digital transmission of the Content to allow a user to listen to such Content, that is configured by the provider of such transmission in a manner designed so that such transmission will not result in a substantially complete reproduction of the Content being made on a local storage device (e.g., the hard drive of the user’s computer or a portable device) so that such reproduction is available for listening other than at substantially the time of the transmission. Notwithstanding the foregoing, Content may be made available in connection with a Naxos China Retailer’s Streaming service as an ephemeral Download lasting no longer than the subscription period available to the end consumer.

 

“Term” means the Initial Term and the Renewal Term(s), collectively.

 

“Territory” means MAINLAND CHINA.

 

9

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