EXHIBIT 10.14
VOTING AGREEMENT
VOTING AGREEMENT, dated as of July __, 2005 (this "Agreement"), by
and between certain existing stockholders of ARTISTdirect, Inc., a Delaware
corporation (the "Company"), listed on the signature pages hereto under the
heading "Stockholders" (each, a "Stockholder" and, collectively, the
"Stockholders"), certain existing stock option holders of the Company listed on
the signature pages hereto under the heading "Option Holders" (each an "Option
Holder" and, collectively, the "Option Holders") and potential investors of the
Company set forth on the signature page hereto under the heading "Investors"
(each, an "Investor" and collectively, the "Investors").
WHEREAS, the Company is contemplating completing a financing
transaction whereby the Investors have agreed to purchase up to an aggregate of
$30 million worth of 4% convertible subordinated notes to be issued by the
Company (together with any notes issued in replacement or exchange thereof in
accordance with the terms thereof, the "Notes"), which Notes shall be
convertible into shares of Common Stock, par value $0.01 per share, of the
Company (the "Common Stock"), in accordance with the terms set forth in the
Notes;
WHEREAS, the Stockholders and the Option Holders hope to benefit
from the contemplated financing transaction;
WHEREAS, the Company will be required to seek stockholder approval
to amend its Certificate of Incorporation to increase the number of presently
authorized shares of Common Stock to allow for conversion of the Notes into
Common Stock in accordance with the terms set forth in the Notes (the
"Certificate of Amendment");
WHEREAS, as a condition to the willingness of the Investors to
purchase the Notes and to consummate the transactions contemplated thereby
(collectively, the "Transaction"), the Investors have required that the
Stockholders agree, and in order to induce the Investors to purchase the Notes,
the Stockholders have agreed, to enter into this Agreement to vote all shares of
Common Stock now owned and which may hereafter be acquired by the Stockholders
(the "Shares") in favor of the Certificate of Amendment; and
WHEREAS, as a condition to the willingness of the Investors to
purchase the Notes and to consummate the Transaction, the Investors have also
required that the Option Holders agree, and in order to induce the Investors to
purchase the Notes, the Option Holders have agreed, to enter into this Agreement
requiring them to exercise all outstanding in-the-money stock options held by
the Option Holders (the "Option Shares") necessary to ensure that stockholder
approval for the Certificate of Amendment is properly obtained.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
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ARTICLE I
AGREEMENT TO VOTE IN FAVOR OF CERTIFICATE OF AMENDMENT
SECTION 1.01. Attendance at Stockholder Meeting. Each Stockholder
agrees, and to the extent an Option Holder has exercised stock options in
accordance with Section 3.01 hereof, such Option Holder also agrees, effective
following the closing of the Transaction, to appear, or cause the holder of
record (the "Record Holder") of any Shares or Option Shares beneficially owned
by it on any applicable record date ("Record Date") to appear, in person or by
proxy, for purpose of obtaining a quorum at any annual or special meeting of the
Company's stockholders (a "Meeting"), called for the purpose of approving the
Certificate of Amendment to increase the authorized shares of Common Stock from
15,000,000 to 60,000,000.
SECTION 1.02. Voting Agreement. Each Stockholder and Option Holder
hereby agrees that at any Meeting, however called, and in any action by written
consent of the Company's stockholders, the Stockholders and the Option Holders
shall vote, or cause the Record Holder to vote, the Shares and/or the Option
Shares (and any other voting interests of the Company directly or indirectly
owned beneficially or of record by such Stockholder or Option Holder on the
Record Date set for such Meeting), in person or by proxy, in favor of the
Certificate of Amendment which shall increase the number of authorized shares of
the Company's Common Stock to 60,000,000. The obligations of the Stockholders
and the Option Holders under this Section 1.02 shall terminate upon the earlier
of (i) the date when the Company has obtained stockholder approval for the
Certificate of Amendment to increase the number of authorized shares of Common
Stock presently set forth in the Company's Certificate of Incorporation or (ii)
March 31, 2006.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDERS AND THE OPTION HOLDERS
Each Stockholder and Option Holder hereby represents and warrants to
the Investors as follows:
SECTION 2.01. Authority Relative to This Agreement. Such Stockholder
or Option Holder has all necessary power and authority to execute and deliver
this Agreement, to perform his or its obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by such Stockholder or Option Holder and constitutes a legal, valid
and binding obligation of such Stockholder or Option Holder, enforceable against
such Stockholder or Option Holder in accordance with its terms.
SECTION 2.02. Title to the Shares and Option Shares. As of the date
hereof, each Stockholder is the beneficial owner of the number of shares of
Common Shares set forth opposite such Stockholder's name on Appendix A attached
hereto, such Shares are owned free and clear of all security interests, liens,
claims, pledges, options, rights of first refusal, agreements, limitations on
such Stockholder's voting rights, charges and other encumbrances of any nature
whatsoever, and such Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Shares owned by
such Stockholder. As of the date hereof, each Option Holder is the holder of
options to purchase that number of shares of Common Stock set forth opposite
such Option Holder's name on Appendix A attached
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hereto, if and when the options are exercised and such underlying shares are
validly issued to the Option Holder, the Option Shares will be owned fee and
clear of all security interests, claims, pledges, options, rights of first
refusal, agreements, limitations on such Option Holder's voting rights, charges
and other encumbrances of any nature whatsoever, and such Option Holder has not
appointed or granted any proxy, which appointment or grant is still effective,
with respect to the Option Shares owned by such Option Holder.
ARTICLE III
OBLIGATION OF OPTION HOLDERS
SECTION 3.01. Agreement to Exercise. To the extent the Company deems
necessary and at the Company's direction, each Option Holder agrees to exercise,
at his or her sole expense, all "in-the-money" stock options set forth on Annex
A attached hereto which are required to be exercised to ensure that the Company
obtains stockholder approval for the Certificate of Amendment. The calculation
as to whether a stock option is "in-the-money" shall be based on the fair market
value of the Company's Common Stock, as reported by the Over-the-Counter
Bulletin Board, on a date that is at least five (5) trading days prior to the
Record Date set forth in the definitive proxy statement on Schedule 14A (or
definitive information statement on Schedule 14C, as applicable) distributed by
the Company for the purpose of soliciting stockholder approval for the
Certificate of Amendment.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Further Assurances. Each Stockholder will execute and
deliver all such further documents and instruments and take all such further
action as may be reasonably necessary in order to consummate the transactions
contemplated hereby.
SECTION 4.02. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that any Investor (without
being joined by any other Investor) shall be entitled to specific performance of
the terms hereof, in addition to any other remedy at law or in equity.
SECTION 4.03. Entire Agreement. This Agreement constitutes the
entire agreement between the Investors, the Stockholders and the Company (other
than the Securities Purchase Agreement) with respect to the subject matter
hereof and supersedes all prior agreements and understandings, both written and
oral, among the Investors, the Stockholders and the Company with respect to the
subject matter hereof.
SECTION 4.04. Amendment. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
SECTION 4.05. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of this Agreement is not affected in any manner
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materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the terms of this Agreement remain as originally
contemplated to the fullest extent possible.
SECTION 4.06. Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
that would cause the application of the laws of any jurisdictions other than the
State of New York.
SECTION 4.07. Successors. This Agreement shall be binding upon the
parties' respective successors, heirs and assigns.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement.
STOCKHOLDERS:
Dated: July __, 2005 UNIVERSAL MUSIC GROUP, INC.
By: /s/ [Illegible]
------------------------------------
Name:
Title:
SONY BMG MUSIC ENTERTAINMENT
By: /s/ Frank Crimmins
------------------------------------
Name: Frank Crimmins
Title: Senior Vice President Finance
CCM MASTER QUALIFIED FUND, LTD.
By: /s/ Clint D. Coghill
------------------------------------
Name: Clint D. Coghill
Title: Director
/s/ Donald P. Muller
----------------------------------------
DONALD P. MULLER
Title:
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WNT07 HOLDINGS, LLC
By: /s/ Teymour Boutros-Ghali
----------------------------------
Name: Teymour Boutros-Ghali
Title: Managing Member
/s/ Amaya Ariztoy
--------------------------------------
CLAXSON INTERACTIVE GROUP, INC.
Name: Amaya Ariztoy
Title: Secretary/Officer
/s/ Rick Rubin
--------------------------------------
RICK RUBIN
/s/ Marc P. Geiger
--------------------------------------
MARC P. GEIGER
OPTION HOLDERS:
/s/ Jon Diamond
----------------------------------
JON DIAMOND
/s/ Robert Weingarten
----------------------------------
ROBERT WEINGARTEN
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INVESTORS:
DKR SOUNDSHORE OASIS HOLDING
FUND LTD.
By: ______________________________
Name:
Title:
CCM MASTER QUALIFIED FUND, LTD.
By: ______________________________
Name:
Title:
__________________________________
RANDY SAAF
__________________________________
OCTAVIO HERRERA
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APPENDIX A
STOCKHOLDER SHARES OWNED:
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Universal Music Group 312,500
Sony BMG Music Entertainment 312,500
Donald P. Muller c/o Creative Artists Agency 329,177
Rick Rubin c/o Alan S. Halfon & Company 362,022
CCM Master Qualified Fund, Ltd. 288,165
Marc P. Geiger 337,740
WNT07 Holdings, LLC 1,109,032
Claxson Interactive Group, Inc. 208,333
Jon Diamond 154,180*
Robert Weingarten 46,666*
*Consists entirely of stock options to purchase shares of the Company's common
stock.
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