Grooveshark

Designation and Authorization to Collect Royalties

THIS DESIGNATION AND AUTHORIZATION AGREEMENT (the "Agreement"), is made effective as of the Date of Execution by Provider (the "Effective Date") and shall remain in effect during the Term (as detailed below in section 6.1) between Escape Media Group, Inc. ("EMG"), a corporation organized and existing under the laws of Delaware 2007, and the Content Provider (hereinafter the "Company") with name and contact information as set forth in the "Contact Information" provided by a duly authorized representative of the Company. Escape Media Group and the Company are sometimes hereinafter referred to individually as a "Party" or collectively as the "Parties."

WHEREAS, EMG is a digital media services company in the business of providing a platform for the exchange and download of digital music and music-related content between and among third party customers, as more fully described in Exhibit A hereto (the "EMG Service" or "Service");

WHEREAS, EMG and Company wish to enter into an agreement pursuant to which EMG is authorized to provide the Service to enable Customers to share, exchange and download digital sound recordings and other content controlled by Company;

WHEREAS, EMG and Company have agreed that EMG shall collect certain fees and royalties from Customers and have agreed upon other terms, which are set forth in this Agreement;

NOW, THEREFORE, and in consideration of the mutual promises contained in this Agreement, the parties hereby agree as follows:

1. Definitions
1. "Sample" means a clip, extract, preview or sample from a Recording that is not more than thirty (30) seconds in duration used for preview, sampling, or evaluation purposes, which Customers may Stream on-demand free of charge and without any royalty payment to Company.
2. "Customer" means any individuals or end users that access and receive Downloads from other Customers using the Service.
3. "Download" means a permanent digital copy of a Recording or Track.
4. "Label Content" consists of all copyrighted sound and video recordings, including sound and video recordings created, acquired or licensed by Company during the Term of this Agreement that are owned, licensed or controlled by Company (the "Recordings"), as well as all related content, metadata, artist name, Track name, album name, album art, cover art, other artwork, liner notes, artist photographs, artist bios and descriptive, editorial and other textual materials (collectively, the "Materials"). Label Content shall include all related labels, affiliate labels and "sub-labels" controlled by or providing content to Company.
5. "Stream" means the digital transmission of a Recording, Track or Sample that does not produce a fixed file embodying such Recording, Track or Sample.
6. "Territory" means the universe, unless otherwise provided in Exhibit C or unless Company otherwise notifies EMG in writing in advance with respect to an individual Recording or Track.
7. "Track" means each separate, individual Recording in the Label Content as electronically and digitally coded, and indicated as a separate selection on the package and/or the liner notes thereof.
2. Grant of License
1. Company hereby grants to EMG, during the Term of this Agreement, subject to the limitations set forth below, a non-exclusive license in the Territory, with the right to sublicense such rights to its Customers:
1. to facilitate the reproduction, public performance and digital downloads of the Recordings between Customers using the Service and to sublicense to Customers the right to reproduce, publicly perform and distribute the Recordings to other Customers through the Service;
2. to publicly perform and fully Stream Label Content on demand through the Service, and to the extent necessary, to create the Samples from the Recordings, and make such Samples accessible for Streaming by Customers and royalty-free to EMG (which shall include the right to make copies in multiple bit rates and formats, backup copies, and any incidental, ephemeral, buffer and iDPD copies that may be required);
3. to facilitate the reproduction, public performance and digital downloads of the Materials between Customers on the Service and to sublicense to Customers the right to reproduce, display, distribute, deliver and exhibit the Materials to other Customers through the Service.
4. to grant Customers the right to use the Label Content accessed and downloaded via the Service. In granting the foregoing license, the Company understands and agrees that the Label Content shared, downloaded, performed, copied and exchanged by Customers via the Service is sourced and made available to Customers solely by other Customers of the Service, and that EMG makes no representations or warranties regarding, and is not responsible for or aware of, the origin or legality of Customers' Label Content. Nothing in this Agreement shall require EMG to exercise, in whole or in part, the rights and licenses granted to it by Company hereunder.
2. The License granted in Section 2.1 above is limited to the use of the Label Content solely in the manner set forth in this Agreement, and does not grant to EMG or any Customer any copyright ownership in any sound or video recording or in any musical composition. As between the parties, Company specifically reserves any and all other rights in connection with the Label Content.
3. If there is a change of circumstance during the Term as a result of which Company reasonably believes that it does not have, or no longer has, the rights necessary to authorize EMG to make available certain Recordings or Tracks, or underlying compositions, that were previously part of the Label Content, or any Materials, then Company shall have the right to withdraw, upon written notice to EMG, authorization for any use of such Label Content on the Service. Following such notice, EMG shall use commercially reasonable efforts to cease to make available such Label Content on the Service as directed within ten (10) business days after EMG's receipt of such notice of withdrawal.
3. Promotion and Press

Neither party shall issue any press release or make any other public statement regarding this Agreement or the transactions contemplated herein without the prior consent of the other party, which shall not be unreasonably withheld or delayed. The parties agree to respond to any press release approval request within seven (7) days.

4. License Fees
1. In consideration of the authorizations and rights granted to EMG hereunder, EMG shall pay to Company, on or before the thirtieth (30th) day following the end of each calendar month during the Term, license fees in an amount calculated in accordance with Exhibit B (the "Fees"). In the event that EMG remits payments with respect to Label Content owned by artists, related labels, affiliate labels or "sub-labels," Company assumes all responsibility for forwarding any such payments to the appropriate related artists, labels, affiliate labels or sub-labels.
2. Notwithstanding the foregoing sentence, if the total amount due to Company for any given calendar month is less than fifty dollars ($50), EMG shall not pay Company the amounts owed for that calendar month, and shall instead carry the balance owed to Company over to the next calendar month.
5. Mechanical and Other Payments

As between the parties, (i) Company shall bear all responsibility for securing, administering and paying, on a timely basis, all publishing rights and royalties (including without limitation, mechanical royalties and synchronization fees, owed to publishers or other applicable entities that own or control the copyrights to musical compositions), (ii) EMG shall bear all responsibility for securing, administering and paying, on a timely basis, all public performance royalties for EMG's Streaming of the underlying musical compositions in the Recordings, Samples or Tracks. Company shall bear all responsibility for paying all record royalties and license fees due to any artists, producers or other third-parties and all union, guild or other third party fees that may be required by contract or the Copyright Act by virtue of the use, copying and distribution of the Label Content via the Service pursuant to this Agreement. Furthermore, EMG may setoff from sums due to Company any tax withholdings and similar payments required by any governmental or local authority due to any distribution of the Label Content via the Service. In such events, EMG shall provide Company with a detailed accounting showing such payments made by EMG.

6. Term
1. The term of this Agreement (the "Term") shall commence on the Effective Date and shall expire two (2) years from the Effective Date. The term shall renew automatically for consecutive one (1) year periods unless either party gives written notice to the other party of its election not to renew at least sixty (60) days prior to the end of the then-current term.
2. Either party may terminate this Agreement immediately, if, at any time, (i) the other party files in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency, (ii) such other party is served with an involuntary petition against it, filed in any insolvency proceeding, and such petition is not dismissed within sixty (60) days after the filing thereof, or (iii) such other party makes an assignment of substantially all of its assets for the benefit of creditors.
3. If either party fails to perform any of the material terms or conditions required of it by this Agreement, the non-breaching party may, at its option, give the breaching party written notice of such material breach or default. Such notice shall describe the nature of the breach. If the breaching party does not cure said breach within sixty (60) days following receipt of any such notice, the non-breaching party may terminate the Agreement immediately upon further written notice to the breaching party.
4. Sections 6.4, 8, 9, 10, 11, 12 and 13 shall survive expiration or termination of this Agreement.
7. Trademarks and Logos

Subject to Company's prior written consent that Company may give or withhold in its sole discretion, EMG may use Company's trademarks and logos to promote the Service; provided however, that EMG shall cooperate with Company and take all necessary steps to protect Company's trademarks, service marks, logos and other intellectual property. EMG agrees that EMG's use of any logos, trademarks or other marks of Company in accordance herewith will not create any right, title or interest in or to any such intellectual property and that all such use and goodwill associated therewith will inure solely to the benefit of Company. Notwithstanding this paragraph, Company hereby grants to EMG and its Customers during the Term the right to display Company's name and logo (i) in connection with the display of any Materials or in relation to the Recordings, (ii) on any EMG controlled websites, and (iii) to identify Company to promote the Service or Customer's business. Notwithstanding the foregoing, EMG shall have the limited right, but not the obligation, to disclose and promote EMG's relationship with Company and to include Company's name and logo in EMG's advertising, publicity and promotion materials. EMG may display on its' service label or artist promotional material including album cover art, liner notes and/or lyrics where available.

8. Confidentiality
1. Except as required by law, Company shall not disclose or make any use of EMG's Confidential Information except to its own employees on a need-to-know basis, its outside counsel, or to any auditor retained by Company solely for the purposes of verification of payments owed to Company. "Confidential Information" shall include all information related to the financial aspects of this Agreement, the terms of this Agreement, the terms of any payments due hereunder, any data provided to Company hereunder, and any other information about EMG, its Customers or the Service that is not available to the general public.
2. In the event Company believes it may be obligated by law to disclose such information, it shall advise EMG and cooperate with EMG in seeking to limit the scope of such disclosure and making such disclosure subject to a protective order or similar device designed to maintain the confidentiality of the EMG's Confidential Information.
3. Except as may be required by law, neither party shall provide this Agreement, or disclose any of the terms and rates contained in this Agreement, to any person or entity without the prior written consent of the other party.
9. Notices
1. All communications to EMG shall be in writing (a "Notice") and deemed received (i) when delivered in person; (ii) upon confirmed delivery by a recognized and reputable overnight delivery service; or (iii) five (5) days after being deposited in U.S. mails, postage prepaid, certified or registered mail, addressed to Escape Media Group, Inc. at the following address:

   Escape Media Group, Inc.
   c/o Samuel Tarantino III
   201 SE 2nd Ave.
   Suite 209
   Gainesville, Fl 32601
   Main: 352.283.8012
   Fax: 727.231.8312

2. EMG may communicate with Company in any manner authorized by the EMG Board, including by posting a communication on a Web site available to Company. Company shall be required to provide EMG with contact information and to update such information within thirty (30) days of any changes thereto. Until such time as Company provides EMG with Notice of any corrections hereto, the contact information for Company shall be contained in "Contact Information".
10. Representations and Warranties
1. EMG hereby represents and warrants that:
1. EMG has the right and power to enter into this Agreement and fully perform its obligations under this Agreement; and
2. EMG has obtained or will obtain at its sole cost and expense all necessary public performance licenses required from any performance rights organization for the Streaming of the underlying musical composition(s) embodied in the Label Content.
2. Company represents and warrants to EMG that:
1. Company has the right and power to enter into this Agreement and fully perform its obligations under this Agreement; and,
2. Company shall be responsible for the payment of all mechanical royalties required by any composer, publisher or owner of the underlying musical composition(s) embodied in the Label Content, all license fees, and record royalties to artists and all union, guild or other third-party fees that may be required by contract or the Copyright Act that may be due by virtue of the exploitation of the Label Content through the Service as authorized hereunder.
3. Company has, and will have during the Term, the rights necessary to grant each and all of the licenses and other rights granted under this Agreement and EMG's and its Customer's exercise of the rights granted under this Agreement will not infringe on any third party's rights including, without limitation, any rights of copyright, trademark, unfair competition, defamation, publicity and privacy.
4. Company shall provide to EMG true, accurate and timely information concerning Company's entitlement to royalties, including, without limitation, complete information regarding the name and address to which Company's payments should be sent and Company's tax identification and repertory information.
11. Indemnities and Limitations of Liability
1. EMG will forever defend, indemnify and hold harmless Company, and each of its parents, subsidiaries, and affiliates and each of their respective officers, directors, agents and employees, from and against any and all third party claims, actions, damages, liabilities, losses, costs and expenses (including reasonable legal expenses and counsel fees) arising out of or in connection with (a)�EMG's use of any Label Content other than in accordance with the grant of rights in this Agreement; and/or (b)�any breach or alleged breach by EMG of any representation, warranty or agreement made by EMG herein. Company shall promptly notify EMG of any action commenced on such a claim. EMG's indemnification obligation shall be further subject to EMG's right at all times in EMG's sole discretion to retain or resume control of the conduct of all or any portion of the defense of the claim concerned through the legal counsel of its choice. EMG shall not enter into any settlement of any liability or claim that requires an admission of guilt or criminal wrongdoing without Company's consent.
2. Company will forever defend, indemnify and hold harmless EMG, and each of its parents, subsidiaries, affiliates and Customers and each of their respective officers, directors, agents and employees, from and against any and all third party claims, actions, damages, liabilities, losses, costs and expenses (including reasonable legal expenses and counsel fees) arising out of or in connection with (a) Company's breach or alleged breach of any representation, warranty or agreement made by Company herein; and/or (b) any failure of Company to have the rights granted to EMG pursuant to this Agreement. EMG shall promptly notify Company of any action commenced on such a claim. Company's indemnification obligation shall be further subject to Company's right at all times in Company's sole discretion to retain or resume control of the conduct of all or any portion of the defense of the claim concerned through the legal counsel of its choice. Company shall not enter into any settlement of any liability or claim that requires an admission of guilt or criminal wrongdoing without EMG's consent.
3. EXCEPT PURSUANT TO AN EXPRESS INDEMNITY OBLIGATION, OR BREACH OF CONFIDENTIALITY OBLIGATIONS, IN NO EVENT SHALL EITHER PARTY (A) BE LIABLE TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, INCLUDING LOSS OF PROFITS OR PUNITIVE DAMAGES, EVEN IF ADVISED OF THEIR POSSIBILITY OR (B) BE LIABLE FOR DIRECT DAMAGES TO THE OTHER PARTY IN AN AMOUNT GREATER THAN THE TOTAL AMOUNT OF FEES DUE AND PAID TO COMPANY DURING THE PRIOR TWELVE (12) MONTH PERIOD.
4. NO WARRANTY OR TERM, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO THE CONDITION, QUALITY, DURABILITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE SERVICE OR ANY ELEMENTS THEREOF IS GIVEN TO, OR SHOULD BE ASSUMED BY, COMPANY, AND ANY SUCH WARRANTIES AND TERMS ARE HEREBY EXCLUDED.
12. Customer Data

As between the parties, EMG shall own and retain all right, title and interest in all names, addresses, and other personally identifiable information collected by it from End Users, and shall have no obligation to share such personal information with Company or any of Company's third-party partners.

13. General
1. This Agreement shall be governed by, and construed in accordance with, the laws of the United States and the State of New York (without giving effect to conflicts of law principles thereof). Any litigation arising out of or relating to this Agreement will be brought in the federal and state courts located in New York County, NY, and the parties hereby consent to the personal jurisdiction and venue therein.
2. The remedies provided herein shall be cumulative and shall not preclude assertion by any party hereto of any other rights or the seeking of any other remedies against the other party hereto. Any failure to exercise or delay in exercising any right, power or privilege granted under this Agreement shall not operate as a waiver of such right, power or privilege. No single or partial exercise of any right, power or privilege granted under this Agreement shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
3. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
4. This Agreement may be modified or amended only by a writing signed by Company and EMG.
5. This Agreement expresses the entire understanding of the parties and supersedes all prior and contemporaneous agreements and undertakings of the parties with respect to the subject matter hereof.
6. Each party will pay all of its own expenses, including attorneys' fees incurred in connection with the negotiation of this Agreement, and the performance of its obligations hereunder.
7. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated hereunder, the losing party shall pay to the prevailing party all of such party's reasonable costs and attorneys' fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.
8. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but which taken together shall constitute one agreement.
9. Except as otherwise expressly provided herein, this Agreement and the rights and obligations hereunder shall not be assignable or transferable by either party without the prior written consent of the other party; provided, however, that either party hereto may assign its rights to any parent or subsidiary, or to any entity that merges with or acquires substantially all of the stock or assets of such party and assumes all obligations and rights of such party under this Agreement.
10. This Agreement shall not be construed to create a partnership, joint venture, agency or other legal relationship between the parties, or to form any other legal entity.
11. This Agreement is for the sole benefit of the parties hereto and their authorized successors and permitted assigns. Nothing herein, express or implied, is intended to or shall confer upon any person or entity, other than the parties hereto and their authorized successors and permitted assigns, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
12. The titles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
13. All rights and licenses granted under or pursuant to this Agreement by Company to EMG are, and shall otherwise be deemed to be, for the purposes of Section 365(n) of the United States Bankruptcy Code (the "Code"), licenses to rights to "intellectual property" as defined under the Code. The parties agree that EMG, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Code. The parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against Company under the Code, EMG shall be entitled to retain all of its rights under this Agreement.
14. In the event any provision of the Agreement is held by a court of competent jurisdiction to be unenforceable, that provision will be enforced to the maximum extent permissible under applicable law and the other provisions of the Agreement will remain in full force and effect.
15. If either party is prevented from performing any of its obligations under this Agreement due to any cause beyond the party's reasonable control, including, without limitation, an act of God, fire, flood, earthquake, explosion, terrorism, war, labor dispute, strike, embargo, government regulation, civil or military authority, acts or omissions of carriers, transmitters, providers, vandals, or hackers (a "force majeure event") the time for that party's performance will be extended for the period of the delay or inability to perform due to such occurrence. Should such force majeure event prevent one party's performance for more than 6 months, the other party may terminate this Agreement upon written notice.
16. Each individual signing this Agreement (either in paper or electronically), whether signed individually or on behalf of any person and/or entity, warrants and represents that the individual has full authority to so execute this Agreement on behalf of the Party on whose behalf he or she signs. Each of the Parties separately acknowledges and represents that this representation and warranty is accurate and is an essential and material provision of this Agreement and shall survive the execution of this Agreement.

IN WITNESS WHEREOF, the duly authorized representatives of each of the Parties hereto have executed this Agreement as of the "effective date".

Exhibit A: The Service

"Service" means EMG's digital music service, currently entitled "Grooveshark," enabling Customers to exchange, share, download, and stream Label Content or any portion thereof and third-party sound recordings, content and materials on demand with other Customers.

All Label Content and third-party recordings and materials, including metadata are sourced and exchanged by and between Customers. Customers act as distribution points in a controlled P2P marketplace through the Service's social network interface. Customers can purchase Downloads of DRM-free MP3 Tracks from other Customers on the Service via a variable pricing system (never more than $.99 per song).

Customers of the Service community will contribute and buy songs located on other Customers' hard drives and listed in the Service library or directory. Customers serve the community by buying songs, contributing their own music, fixing music ID tags, writing music reviews and flagging poor quality songs, and are thus rewarded with a higher ranking in the Grooveshark UserComptm System. The higher a Customer is ranked, the more generously the Customer is compensated for their contributions.

The Service collects a Transaction Fee (defined in Exhibit B) and then divides these revenues among copyright holders, Customers and the Service.

The Service is at once the tollbooth, collecting royalties on the record companies' behalf (even on files that may have previously been shared illegally); the community, where people can learn about and share music; a market, where established artists can connect with their fans; and an entry point where independent musicians, responsible for 80 percent of new music, can build their base.

Exhibit B: Fees

EMG shall charge Customers a fee for each Download of a Recording through the Service (the "Transaction Fee"). EMG shall pay Company 50% of the Transaction Fee (for both master and mechanical royalties or 40% if EMG pays mechanical royalties separately) for each Download of a Recording completed through the Service. The Transaction Fee shall be variable based on demand within Company's catalogue. The Minimum Transaction Fee charged to End-User shall be $.25 and the Maximum Transaction Fee shall be $.99.

Accounting. EMG shall render to Company an accounting on a monthly basis fifteen (15) days after month end. Such accounting shall be delivered through a web interface provided to Company, and shall include each Download facilitated hereunder by Track title, and amount and type of currency of corresponding payment to Company. EMG shall account to Company utilizing the unique identifiers supplied to EMG by Company when Company provides the applicable metadata with respect to Company 's Recordings. EMG shall maintain complete and accurate books and records relating to the subject matter hereof. Upon reasonable notice, Company at its own expense shall have the right to audit or authorize a third party to audit EMG's books and records to verify the completeness and accuracy thereof and of such statements, at the place in the U.S. where EMG maintains such records. Any such examination shall take place during normal business hours and on at least thirty (30) days prior written notice and in connection therewith. During such an audit, Company shall under no circumstances be given any information, code, or access beyond the records and information directly relating to its Artists. It shall be the sole objective of such an audit to demonstrate within reasonable means to an auditor within the limitations of the service that EMG is correctly recording transactions, distributing payments, and storing information related to Company. If such audit reveals a discrepancy of ten percent (10%) or greater in the amounts shown to have been payable to Company, EMG shall reimburse Company their reasonable costs and expense of such audit.