Confidential portions omitted and filed separately with the Commission. Deleted
text (represented by "XXX") indicate such omissions.
AGREEMENT made as of this 30th day of April, 1996, by and between Imprint
Records, Inc., 209 10th Avenue South, Suite 500, Nashville, Tennessee 37203
("Company"), and TIMTOJAY MUSIC, INC. ("You").
1. SERVICES.
During the term of this Agreement (the "Term") and for the Territory (as
that term is described hereinbelow), You will cause Charlie Major ("Artist") to
render exclusive services as a recording artist for Company, cause Masters to be
produced and Deliver same to Company and cause camera-ready artwork to be
produced and Deliver same to Company to be used in connection with the
manufacturing and promotion of Records embodying those Masters to be produced
and Deliver same to Company, among other things as specifically described in
this Agreement. Your obligations will include, among others, furnishing and
paying for the services of the producers of those Masters and all other third
parties rendering services in connection with those Masters as well as paying
for all of the Recording Costs in connection with those Masters. Attached hereto
as Exhibit "A" is a so-called "inducement letter" signed by Artist.
Notwithstanding anything to the contrary contained herein, Company hereby
acknowledges that certain agreement previously entered into by and between
Artist and BMG Music Canada, Inc. ("BMG") on or about the 11th day of January,
1993, as amended, (the "BMG Agreement") pursuant to which Artist is required to
render his exclusive services as a recording artist to BMG for the Universe
excluding the Territory.
2. TERM.
2.01 The Term shall hereof shall commence on the date of the full execution
of this Agreement and shall consist of the Initial Period, and each Option
Period, if any. The Initial Period and each Option Period are each hereafter
sometimes referred to as a "Contract Period". The Initial Period shall commence
on the above date and continue until the earlier of (i) XXXXXXXX days after the
exercise by BMG of its option to extend the term of the BMG Agreement into the
Second Option Period as provided for in the BMG Agreement, if at all, or (ii)
XXXXXXXXXX after the last date by which BMG is required to exercise its option
to extend the term of the BMG Agreement into the Second Option Period as
provided for in the BMG Agreement, if at all; but in no event earlier than the
last day of the XXXXXXXXXX full calendar month following the initial release by
Company in the
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
Territory of the First Licensed Album (as that term is described hereinbelow).
You hereby grant Company XXXXXXXXXX options to extend the Term for additional
Contract Periods ("Option Periods") on the same terms and conditions as the
Initial Period, unless otherwise provided herein. Company may exercise each
option by written notice to You sent before the end of the Contract Period
then in effect ("Current Contract Period"). Each Option Period shall commence
upon the expiration of the immediately preceding Contract Period. Unless
terminated as otherwise provided herein, the First Option Period hereunder, if
any, shall continue until the earlier of (i) XXXXXXXXXX days after the exercise
by BMG of its option to extend the term of the BMG Agreement into the Third
Option Period as provided for in the BMG Agreement, if at all, or (ii)
XXXXXXXXXX days after the last date by which BMG is required to exercise its
option to extend the term of the BMG Agreement into the Third Option Period as
provided for in the BMG Agreement, if at all; but in no event earlier than the
last day of the XXXXXXXXXX full calendar month following the initial release by
Company in the Territory of the first Album of newly recorded material (as
distinguished from the First Licensed Album, the Second Licensed Album or any
and all Greatest Hits Albums (as those terms are defined hereinbelow)) solely
embodying the performances of Artist. Additionally, unless terminated as
otherwise provided herein, the Second Option Period hereunder, if any, shall
continue until the earlier of (i) XXXXXXXXXX days after the exercise by BMG of
its option to extend the term of the BMG Agreement into the Fourth Option Period
as provided for in the BMG Agreement, if at all, or (ii) XXXXXXXXXX days after
the last date by which BMG is required to exercise its option to extend the term
of the BMG Agreement into the Fourth Option Period as provided for in the BMG
Agreement, if at all; but in no event earlier than the last day of the
XXXXXXXXXX full calendar month following the initial release by Company in the
Territory of the second Album of newly recorded material (as distinguished from
the First Licensed Album, the Second Licensed Album or any and all Greatest Hits
Albums (as those terms are defined hereinbelow)) solely embodying the
performances of Artist. Furthermore, unless terminated as otherwise provided
herein, the Third Option Period hereunder, if any, shall continue until the
earlier of (i) XXXXXXXXXX days after the exercise by BMG of its option to extend
the term of the BMG Agreement into the Fifth Option Period as provided for in
the BMG Agreement, if at all, or (ii) XXXXXXXXXX days after the last date by
which BMG is required to exercise its option to extend the term of the BMG
Agreement into the Fifth Option Period as provided for in the BMG Agreement, if
at all; but in no event earlier than the last day of the XXXXXXXXXX full
calendar month following the initial release by Company in the Territory of the
third Album of newly recorded material (as distinguished from the First Licensed
Album, the Second Licensed Album or any and all Greatest Hits Albums (as those
terms are defined hereinbelow)) solely embodying
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
2
the performances of Artist. Additionally, unless terminated as otherwise
provided herein, the Fourth Option Period hereunder, if any, shall continue
until the earlier of (i) XXXXXXXXXX days after the exercise by BMG of its
option to extend the term of the BMG Agreement into the Sixth Option Period as
provided for in the BMG Agreement, if at all, or (ii) XXXXXXXXXX days after the
last date by which BMG is required to exercise its option to extend the term of
the BMG Agreement into the Sixth Option Period as provided for in the BMG
Agreement, if at all; but in no event earlier than the last day of the XXXXXXXXX
full calendar month following the initial release by Company in the Territory of
the fourth Album of newly recorded material (as distinguished from the First
Licensed Album, the Second Licensed Album or any and all Greatest Hits Albums
(as those terms are defined hereinbelow)) solely embodying the performances of
Artist. The Fifth Option Period hereunder, if any, shall continue until the last
day of the XXXXXXXXXX full calendar month following the initial release by
Company in the Territory of the fifth Album of newly recorded material (as
distinguished from the First Licensed Album the Second Licensed Album or any
and all Greatest Hits Albums (as those terms are defined hereinbelow)) solely
embodying the performances of Artist. For the purposes of calculating the
periods specified above, the month of December (including any and all of the
days of said months) shall be excluded from the calculation of such periods.
If Company fails to give notice of its exercise of any option as specified
above, the Term shall automatically expire at the end of the current Contract
Period.
2.03 Notwithstanding anything to the contrary contained herein, in the
event that BMG fails or otherwise chooses not to exercise any of its options, as
above-described, or the BMG Agreement is terminated for any reason whatsoever
prior to the delivery by Artist to BMG of the Seventh LP (as described in the
BMG Agreement), then Company shall continue to have the right to exercise its
options for additional Contract Periods, as above- described, on the further
terms and conditions as described in Paragraph 25 hereinbelow. Furthermore, in
the event that the BMG Agreement is extended, amended or the like, pursuant to
which extension or amendment Artist agrees to deliver more Albums to BMG than
heretofore provided for in the existing BMG Agreement, then this Agreement shall
be deemed automatically extended and amended to grant Company such additional
Option Periods so that Company has the right to release, if at all, such
additional Albums on such terms and conditions as may be agreed upon by Company
and You after and as the result of good faith negotiations. Notwithstanding
anything to the contrary contained herein, You agree to consult with Company
prior to entering into any extension or amendment of the existing BMG Agreement.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
3
3. RECORDING COMMITMENT ("COMMITTED ALBUMS").
3.01 During the Initial Period, Company will release the First Licensed
Album. During each Option Period, you shall cause Artist to record and you shall
deliver to Company one (1) Album. You shall deliver to Company the Committed
Album for a Contract Period within XXXXXXXXXX days after such period's
commencement; provided, however, that Artist will not be required to deliver an
Album prior to the later of the date (i) XXXXXXXXXX months after the Delivery of
the immediately preceding Album or (ii) XXXXXXXXXX months after the initial
release in the Territory of the immediately preceding Album.
3.02 Notwithstanding anything to the contrary contained herein and,
furthermore, provided that BMG exercises its option to extend the term of the
BMG Agreement into the Second Option Period as provided for in the BMG
Agreement, in the event that the First Licensed Album attains net
Soundscan-measured sales in the Territory equal to or greater than XXXXXXXXXX
units in all configurations combined (with a XXXXXXXXXX provision for reserves
for this calculation only) no later than the actual date by which Company would
otherwise be required to exercise its option to extend the Term of this
Agreement into the First Option Period (the "First Option Date"), then Company's
option to extend the term of this Agreement into the First Option Period is
deemed automatically exercised as of the First Option Date. In the event that
the Term of this Agreement does not extend into the First Option Period hereof,
if Company has not released the Second Licensed Album as of such early
termination date, then Company will no longer have the right to so-release said
Second Licensed Album.
4. RECORDING PROCEDURES.
4.01 Notwithstanding anything to the contrary contained herein or in the
BMG Agreement, Company and you shall mutually approve all recording personnel
(including producers), the Musical Compositions or other Selections (including
medleys), the studios, the recording dates and a detailed recording budget
(collectively, the Recording Elements") subject to the terms and conditions set
forth in the BMG Agreement.
4.02 (a) As and when required by Company, you shall allow Company's
representatives to attend any or all recording sessions hereunder.
(b) You shall timely supply Company with all of the information Company
needs in order to prepare to release Phonograph Records derived from such
Masters.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
4
(c) (i) All Masters shall be recorded under BMG's current Phonograph Record
Labor Contract with the AFM; all musicians who render services in connection
with the recording of such Masters (including instrumentalists, if any) will be
paid by You, the scale set forth in the said Labor Contract; and You shall pay
the required contributions to the Pension Welfare Fund.
(ii) All AFTRA members whose performances are embodied in the Masters
will be paid by You the rates applicable under the current AFTRA Code of
Fair Practices for Phonograph Recordings. You shall also pay to the AFTRA
Pension and Welfare Fund any contribution required to be made under the
AFTRA Code based on compensation to other performers whose performances are
embodied on the applicable Masters recorded hereunder.
(iii) The foregoing representations and warranties are included for
the benefit, respectively, of the AFM, AFTRA, and the AFM and AFTRA members
whose performances are embodied in the applicable Masters and may be
enforced by AFM and/or AFTRA or their respective designees, as the case may
be, and by Company.
(iv) You shall furnish or shall cause the applicable Producer to
furnish Company with copies of all union contracts and/or union session
reports.
4.03 (a) You shall deliver to Company the Masters promptly after their
completion. All original session tapes and any derivatives or reproductions
thereof shall be delivered to Company concurrently, or, at Company's election,
maintained at a recording studio or other location designated by Company, in
Company's name and subject to Company's control. Each Master shall be subject to
Company's approval as satisfactory for the manufacture and sale of Phonograph
Records, and, upon Company's request and at Your sole expense, you shall
re-record any Musical Composition or other Selection until a Master satisfactory
to Company has been obtained; provided, however, that all of the Recording
Elements associated with such additional Selections or re-recordings shall be
subject to the mutual approval of Company and You. Any Masters which are not
accepted by Company or not deemed satisfactory or otherwise not deemed Delivered
hereunder shall be considered "outtakes".
(b) In addition to Your Delivering to Company those elements, parts and the
like as described in Paragraph 8.b. of the BMG Agreement, You shall Deliver to
Company fully mixed, edited, and unequalized and equalized Masters (including
but not limited to a final two-track equalized tape copy), satisfactory to
Company for its manufacture and sale of Phonograph Records, and all original and
duplicate Masters of the material recorded, together with (i) the multi-track
tape and one (1) safety copy
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
5
thereof; (ii) all necessary licenses and permissions; (iii) all materials
required to be furnished by you to Company for use in the packaging and
marketing of the Records, including without limitation, complete "label copy"
information with respect to such Masters; such "label copy" shall include,
without limitation (A) the title, recording dates, timing, publisher(s)
songwriter(s), performer(s) and composer(s) of each musical composition embodied
on the Masters; (B) the producer(s) thereof; and (C) any other credit and
information that is to appear on the labels, liners and packaging of Records
embodying such Masters; (iv) all "sideman" and any third party clearances and
consents, including, without limitation, all written consents in connection with
Embodied Copyrighted Materials (as defined in paragraph 13.04(a) below); (v) all
mechanical and first-use licenses for each musical composition embodied in the
Masters at the rate specified herein; and (vii) all liner notes, approved
artwork, and credits for all configurations of records. Notwithstanding anything
to the contrary contained herein, any remixing or remastering or tape
duplication(s) that may occur solely at the request of Company after the
Delivery of the Masters shall be nonrecoupable hereunder, unless You or Artist
agree otherwise.
4.04 Each Master shall embody the Artist's performance as the sole featured
artist of a single Musical Composition previously unrecorded by the Artist and
shall be recorded in its entirety in a recording studio or in such a recording
facility and with such recording equipment as may be reasonably approved by
Company. No Masters shall be recorded in whole or in part at live concerts or
other live performances unless an authorized officer of Company agrees to the
contrary in writing. Each Committed Album shall embody no fewer than XXXXXXXXXX
minutes in playing time and containing no fewer than XXXXXXXXXX Musical
Compositions unless Company otherwise agrees to the contrary in writing. You
shall not record or deliver hereunder, nor shall Company be obligated to accept,
Masters constituting a Multiple Album. However, if You shall do so and Company
shall accept those Masters hereunder, then, at Company's election, for the
purpose of calculating the number of Masters recorded and delivered hereunder,
those Masters shall be deemed to be only one (1) Album.
4.05 Any Masters which are not recorded or delivered in all respects in
accordance with the terms hereof shall not, unless Company otherwise consents in
writing, apply towards the fulfillment of your Recording Commitment.
Furthermore, if Company shall make any payments on Your behalf with Your prior
approval or which are a part of the approved Recording Elements or approved
Recording Budget with respect to any Master, you shall, within XXXXXXXXXX days
of Company's demand, pay to Company the amount thereof and Company may, without
limiting Company's
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
6
other rights and remedies, deduct that amount from any monies payable by
Company hereunder.
4.06 If you or the Artist shall for any reason whatsoever except for a
verified medical reason (excluding any illness related to drugs, alcohol or any
self-induced or personally exacerbated cause, and otherwise subject to the terms
hereof, including without limitation paragraph 17) delay the commencement of or
be unavailable for any recording sessions for the Masters, you shall, within
XXXXXXXXXX days following Company's demand, pay Company an amount equal to the
expenses or charges paid or incurred by Company by reason thereof. Company may,
without limiting Company's other rights and remedies, deduct that amount from
any monies payable by Company hereunder.
4.07 Company may, at its election, discontinue any recording sessions for
the Masters if in Company's judgment the Masters being produced will not be
satisfactory; provided, however, that prior to discontinuing any such recording
sessions, Company agrees to consult with You and Artist with the goal of
agreeing to viable alternatives (including, but not limited to the recording of
additional or other selections, etc.).
5. RECORDING COSTS.
5.01 You shall pay the Recording Costs of the Masters recorded at recording
sessions conducted in accordance with the terms hereof. If the Recording Costs
of any Masters shall exceed the Recording Budget approved by Company, You shall
be solely responsible for and shall promptly pay the excess. You shall be solely
responsible for and shall make any payments to any individuals rendering
services in connection with the recording of the Masters. You shall also be
solely responsible for and shall pay any penalties incurred for late payments
caused by any delay in submitting union contracts forms, report forms, or
invoices or other documents. If, however, Company, on Your behalf and at Your
request, pays any of the Recording Costs (including, but not limited to the
excess or such other costs as described above), you shall, within XXXXXXXXXX
days following Company's demand, pay to Company the amount thereof and Company
may, without limiting Company's other rights and remedies, deduct that amount
from any monies payable by Company hereunder.
5.02 Recording Costs shall mean and include all union scale payments
(including "excess" scale payments) made to the Artist, all payments required to
be made to any other individuals rendering services in connection with the
recording of the Masters (including, but not limited to, the Producer), all
other payments which are required to made by You or Company pursuant to any
applicable law or regulation or the provisions of any collective bargaining
agreement between You or Company and any
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
7
union or guild, all amounts paid or incurred for studio or hall rentals, tape,
engineering, editing, instrument rentals and cartage, mastering, mixing,
re-mixing, "sweetening", transportation and accommodations, immigration
clearances, trademark and service mark searches and clearances, "sample"
clearances any so-called "per diems" for any individuals (including the Artist)
rendering services in connection with recording of the Masters, together with
all other amounts paid or incurred by Company in connection with the recording
of the Masters; provided, however, that any Recording Costs incurred after
Delivery shall be subject to Paragraph 4.03 hereinabove. Notwithstanding the
foregoing, you agree that the Advances hereunder include the prepayment of
session union scale as provided in the applicable union codes, and you and
Artist agree to complete any documentation required by the applicable union to
implement this sentence. Notwithstanding anything to the contrary contained
herein, the term Recording Costs shall also mean and include all other amounts
paid or incurred for the preparation of camera-ready artwork to be used in
connection with the manufacturing and sale of Masters hereunder (including,
but not limited to, photo session costs, photographer costs, artwork
preparation, lay-out design, duplication costs, shipping costs, and the like).
5.03 If packaging for Phonograph Records hereunder contains special
elements or requires additional fabrication costs (e.g., for embossing,
die-cutting, special ink or paper, additional color separations requested by
you, etc.) such that Company would incur manufacturing or fabrication costs in
excess of Company's normal per-unit costs without such special elements or costs
("Standard Manufacturing Costs"), and provided you have requested or consented
to such special elements or additional fabrication costs, the excess above
Company's Standard Manufacturing Costs shall be paid by you or reimbursed to
Company on demand. All such excess costs incurred by Company shall be invoiced
to you, and may be deducted from any sums (other than mechanical royalties)
required to be paid by Company pursuant to this Agreement. (Nothing contained
herein shall be deemed to require Company to utilize any artwork elements which
would cause Company to incur any Special Packaging Costs.)
6. RIGHTS.
6.01 (a) Subject to the terms and provisions herein, Company shall have the
exclusive right to for itself and to authorize others to manufacture, sell,
distribute and advertise Phonograph Records embodying those Masters under any
trademarks, trade names or labels, and to lease, license, convey or otherwise
use or dispose of those Masters by any method now or hereafter known in any
field of use and to perform publicly Phonograph Records and other reproductions
embodying those Masters, all upon
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
8
such terms as Company may approve, or Company may refrain from doing any or
all of the foregoing.
(b) Notwithstanding anything to the contrary contained herein, Company
shall not have the right to manufacture, sell, promote or otherwise distribute
Masters (including the First Licensed Album, the Second Licensed Album and any
and all Greatest Hits Albums) after the XXXXXXXXXX period commencing on the date
of the retail street date in the Territory of the last Phonograph Record
embodying any of the Masters described herein (the "Distribution Period").
Furthermore, and notwithstanding anything to the contrary contained herein, in
the event that as of the last day of the Distribution Period the sum of all of
your royalty accounts (including, but not limited to, your royalty account in
connection with Audiovisual Recordings and in connection with audio royalties)
on the books of Company has a debit balance, the Distribution Period shall
automatically be extended for an additional period of time until no later than
the next accounting period semester first falling after that accounting
statement that Company was required to deliver to You which would have showed
(if applicable) that Your royalty account on the books of Company has a credit
balance. Subject to the terms and provisions set forth in this Agreement,
nothing contained herein shall prevent Company from entering into licenses the
term of which extend for XXXXXXXXXX from the date of the initial release of the
Record embodying such licensed master. For the avoidance of doubt, Company shall
be required to obtain Your prior approval in connection with any such licenses
that extend beyond XXXXXXXXXX (as described in the immediately preceding
sentence), which approval will not be unreasonably withheld. Upon the expiration
of the Distribution Period (as same may be extended), Company shall offer to
sell to you its inventory of Records manufactured from, or embodying all or any
portion of any of the Masters at its then current box- lot/wholesale price to
distributors with respect to such particular Records. You shall have XXXXXXXXXX
days from the receipt of Company's notice to accept such offer. Notwithstanding
anything to the contrary contained herein, for XXXXXXXXXX months following
expiration of the Distribution Period (hereinafter the "Sell-Off Period"),
Company may continue to advertise and sell any Records previously manufactured
from, or embodying all or any portion of any of the Masters and on hand on a
non-exclusive basis; provided, however, that Company shall have furnished you
with a written inventory upon the expiration of the Distribution Period.
Following the expiration of the Distribution Period and the Sell-Off Period
referred to in this Subparagraph, Company shall notify you as to the number and
type of Records manufactured from, or embodying all of any portion of the
Masters then remaining on hand, and you may, at your option, exercisable within
XXXXXXXXXX after such notice, repurchase any or all such Records at Company's
manufacturing cost thereof or
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
9
instruct Company to destroy such Records. If Records are destroyed, Company will
furnish to you an affidavit to that effect upon your request. Additionally, at
such time, Company will execute all paperwork and documents necessary to
transfer any and all copyrights (or the like) as above-described in Paragraph
6.01 (a) to You and Company will not have any further rights in and to the
Masters. Additionally, following the expiration of the Distribution Period and
the Sell-Off Period referred to herein, Company agrees to execute such documents
as necessary so as to revert to You or your designees any and all rights or the
like that it may have in and to the any of the Masters, including, but not
limited to any rights that Company may have to income from Masters licensed
hereunder to third parties which licenses extend beyond the expiration of the
Distribution Period and Sell-Off Period. Company acknowledges that after the
Distribution Period and the Sell-Off Period, it has no rights in and to any of
the Masters. For the avoidance of doubt, nothing contained herein shall
authorize or otherwise permit Company to manufacture any Records during the
Sell-Off Period.
c. Notwithstanding anything to the contrary contained herein and so long as
the sum of all of your royalty accounts on the books of Company has a debit
(i.e. unrecouped) balance, during the XXXXXXXXXX after the retail street date in
the Territory of the last Record embodying any of the Masters described herein,
You shall have the right to pay to Company the sums described in Subparagraph
(d) hereinbelow ("Repurchase Price") and upon the receipt of such payment by
Company, the Term of this Agreement shall expire and otherwise terminate;
provided, however, that Company shall still retain its right to the Sell- Off
rights as described in the immediately preceding Subparagraph (b) (the
"Repurchase Right"). Furthermore, Your exercising the Repurchase Right will not
affect any licenses that Company might have entered into in connection with the
Masters.
d. The Repurchase Price in connection with the Repurchase Right, if any,
shall be the amount equal to XXXXXXXXXX of sum of all of your and Artist's
royalty accounts on the books of Company which contain a debit balance
(including, but not limited to the audio account and the Audiovisual Account) as
of the end of the immediately preceding royalty accounting period.
6A.01(a) Provided you have fulfilled all your material obligations under
this Agreement, Company will commercially release each Album recorded in
fulfillment of your Recording Commitment in the Territory within XXXXXXXXXX days
after the date of completion of the lacquer, copper or equivalent masters
concerned; provided, however, that Company will commercially release the First
Licensed Master in the Territory no later than September 30, 1996 and nothing
contained herein shall grant
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
10
Company any so-called "cure" rights with respect to its release commitment for
such First Licensed Master. If Company fails to do so you may notify Company at
any time after the end of the XXXXXXXXXX day period concerned, that you intend
to terminate the Term of this Agreement unless Company releases the Album within
XXXXXXXXXX days after Company's receipt of your notice (the "cure period"). If
Company fails to commercially release the Album in the Territory before the end
of the cure period you may terminate the Term of this Agreement by giving
Company notice at any time after the end of the cure period. On receipt by
Company of your termination notice the Term of this Agreement will end and all
parties will be deemed to have fulfilled all of their obligations under it
except those obligations which survive the end of the Term (e.g., warranties,
re-recording restrictions and obligation to pay royalties) and Company will have
no rights in and to such Album that it failed to release (which failure to
release resulted in the termination of this Agreement as provided for herein).
Your only remedy for failure by Company to release an Album will be termination
in accordance with this paragraph.
(b) The running of the XXXXXXXXXX day and the XXXXXXXXXX day period
referred to in paragraph 6A.02(a) will be suspended (and the expiration date of
each of those periods will be postponed) for the period of any suspension of the
running of the Term of this Agreement under paragraph 17.01. If any such
XXXXXXXXXX day or XXXXXXXXXX day period would otherwise expire on a date between
October 31st and the next February 1st its running will be suspended for the
duration of the period and between October 31st and February 1st and its
expiration date will be postponed by the same amount of time (i.e., XXXXXXXXXX).
6A.02 Company shall not re-mix or re-edit any Master Recording delivered in
fulfillment of your Recording Commitment without your mutual approval. The
preceding sentence shall not apply with respect to editing necessary for the
release of Singles, Long-Play Singles or non-disc configurations, or to
eliminate material which in the reasonable opinion of Company's legal counsel is
likely to constitute a defamation, libel or violate or infringe upon any right,
including, without limitation, the right of privacy, of any person.
6A.03 Company shall consult with you in connection with Company's selection
of the so-called "A" sides and "B" sides of Singles released in the Territory;
provided that Company's inadvertent failure to do so shall not be deemed a
breach hereof. During the Term hereof, you shall select the "B" side of each
Single released in the Territory; provided that you have first consulted in good
faith with Company with respect to such "B" Side selection and provided you make
such selection in a timely manner. Notwithstanding the foregoing, Company shall
have the absolute right to reject such "B" Side for any Master that
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
11
Company reasonably believes may subsequently be released as the "A" Side of a
Single.
6A.04 During the Term, Company will not, without Your consent, sell Records
derived from Masters delivered in fulfillment of Your Recording Commitment as
"cut-outs" in the Territory prior to the earlier of (i) XXXXXXXXXX from the date
of initial Territory release of such Records or (ii) XXXXXXXXXX after such
Record is no longer in any then-published Billboard Chart; however, if Company
sells any Records in contravention of the foregoing restriction, Your sole
remedy shall be that You shall be entitled to the otherwise applicable royalty
rate hereunder on all such sales during the period of such restriction.
6A.05 (a) In the event Company elects to sell Records hereunder as cut-outs
as authorized by Paragraph 6A.04 hereinabove, Company shall so notify You, and
shall offer You the opportunity to purchase all of such inventory (provided that
no failure by Company to give such notice and/or offer said opportunity to You
shall constitute a breach hereof) at a price equal to the price at which Company
elected to sell all of such Records to third parties. You may notify Company of
Your desire to purchase Company's inventory in the Territory of such Records,
provided that You tender payment-in-full therefor within XXXXXXXXXX business
days following your receipt of such cut-out Records. You shall be deemed to have
rejected such opportunity if You do not respond in writing within XXXXXXXXXX
business days following Company's offer to You of the opportunity to purchase
such Records.
(b) Solely with respect to any Records which are "cut- out" by Company,
Company and You shall both have the right, subject to the approval of the other
party, such approval not to be unreasonably withheld, to enter into third-party
licenses for the sale and distribution of such "cut-out" Records; provided,
however, that XXXXXXXXXX of the net income from such "cut-out" licenses shall be
payable directly to Company for its own account and XXXXXXXXXX of the net income
from such "cut-out" license shall be payable directly to You for your own
account.
6A.06 During the Term, Company will not, without Your consent, sell any
Committed Album as a Budget Record in the Territory until the earlier of (i)
XXXXXXXXXX months after the initial release of the Album concerned as a
"top-line" Record in the Territory or (ii) XXXXXXXXXX after the Committed Album
no longer appears in any Billboard Album Chart; however, if Company sells any
Records in contravention of the foregoing restriction, Your sole remedy shall be
that You shall be entitled to the otherwise applicable royalty rate hereunder on
all such sales during the period of such restriction.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
12
6A.07 During the Term, Company will not, without Your consent, sell any
Committed Album as a Mid-Priced Record in the Territory until the earlier of (i)
XXXXXXXXXX after the initial release of the Album concerned as a "top-line"
Record in the Territory or (ii) XXXXXXXXXX after the Committed Album no longer
appears in any Billboard Album Chart; however, if Company sells any Records in
contravention of the foregoing restriction, Your sole remedy shall be that You
shall be entitled to the otherwise applicable royalty rate hereunder on all such
sales during the period of such restriction.
6A.08 Company will not, without your consent, initially release any
Committed Album in the Territory under any record label other than a "top-line"
label then used by the Imprint Records, Inc. for recordings of performances by
the best-selling pop artists then under exclusive term contract to Imprint
Records, Inc.; provided, however, that this restriction shall not apply to the
Second Licensed Master.
6A.09 With respect to audio Records manufactured for sale in the Territory,
Company will not, without obtaining Your consent, use or license others to use
Masters on "Premium Records". (A "Premium Record" is a Record produced for use
in promotion of the sale of merchandise other than Phonograph Records which
bears the name of the sponsor for whom the Record is produced.).
6A.10 Company will not, without your consent, commercially release
"outtakes" on Phonograph Records or otherwise exploit such outtakes. "Outtakes"
shall mean preliminary, unfinished Master Recordings made under this Agreement
or such other Masters that are specifically called 'outtakes' hereunder. For the
purpose of this Agreement, the term "outtakes" will include any Masters that are
"in the can" and have not been released as a part of an Album project.
6A.11 Company shall not, without your consent, license the Masters for use
in the Territory in television or radio commercials advertising non-phonograph
record products or for motion pictures or television (pay, free broadcast or
otherwise) programming which motion pictures or television programming at the
time of the license is intended to have an "X" or "NC-17" rating by the Motion
Picture Association of America; provided, however, that in the event that Your
account is in a "recouped position" on the books of Company (as that term is
generally understood in the music industry), then Company will not, without your
consent, license the Masters for use in any motion picture or television
programming. Notwithstanding anything to the contrary contained herein, after
the Term of this Agreement, Company shall be entitled to retain for its own
account XXXXXXXXXX of the net income payable from any licenses entered
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
13
into pursuant to this Paragraph 6A.16 which licenses were entered into during
the Term. Furthermore and notwithstanding anything to the contrary contained
herein, Company shall be entitled to retain for its own account XXXXXXXXXX of
the net income payable from any licenses entered into pursuant to this Paragraph
6A.16 which licenses were entered into during the period of time beginning as of
the expiration of the Term of this Agreement and ending on the date XXXXXXXXXX
thereafter (the "End Date"); provided, however, that in the event that You are
in negotiations for any such licenses as of the End Date, then such XXXXXXXXXX
amount shall be payable to Company so long as the license is actually entered
into no later than the date one (1) year after the End Date.
6A.12 (a) (i) If Company releases in the Territory a "Greatest Hits" or
"Best Of" type Album consisting of Master Recordings recorded hereunder, Company
and You shall mutually agree upon the selections, tracking, title and artwork to
be included on such "Greatest Hits" or "Best Of" type Album; provided, however,
that Your approval shall be deemed granted in connection with any Record that
was or is planned to be released as a Single hereunder.
(ii) With respect to any "Greatest Hits" or "Best Of" type Album to be
released in the Territory during the Term, if Company shall so request, You
shall Deliver to Company within XXXXXXXXXX days following such request up to
XXXXXXXXXX sides (the "New Side(s)"), consisting of newly recorded material, for
(without limitation) inclusion in said "Greatest Hits" or "Best Of" type Album.
(b) Provided You are in compliance with Your material obligations
hereunder, if Company releases any such "Greatest Hits" or "Best Of" type Album
in the Territory in accordance with subparagraph 6A.12 (a) above, then Company
shall pay to You an Advance (the "Greatest Hits Advance") equal to the amount by
which XXXXXXXXXX exceeds the unrecouped balance of Your royalty account
hereunder, provided, however, in no event shall the Greatest Hits Advance be
less than the actual Recording Costs approved by Company in connection with the
New Sides, if any plus XXXXXXXXXX. Any Greatest Hits Advance payable to You
pursuant to this paragraph 6A.12 (b) shall be made as follows: XXXXXXXXXX upon
the delivery of the New Sides, if any, and the balance promptly after the
initial Territory release of the "Greatest Hits" or "Best Of" type Album
concerned. Notwithstanding the foregoing, if Company requests the New Sides and
You fail or refuse to deliver the New Sides, then no Greatest Hits Advance shall
be payable to You in connection with Company's release of any such "Greatest
Hits" or "Best Of" type Album.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
14
(c) Company shall pay any and all costs (the "New Side(s) Costs") incurred
in connection with such "Greatest Hits" or "Best Of" type Album. The applicable
Greatest Hits Advance rpayable and the New Side(s) Costs shall be charged
against and recoupable at any time from any and all royalties (other than
mechanical royalties) accruing to Your credit hereunder. Neither any "Greatest
Hits" or "Best Of" type Album(s) nor any New Side(s) shall be deemed part of
Your Recording Commitment hereunder.
(d) The royalty rate applicable to a given Master Recording embodied on a
"Greatest Hits" or "Best Of" type Album shall be the highest royalty rate
actually attained hereunder for the Contract Period in which such Master
Recording was recorded. The royalty rate applicable to the New Sides shall be
equal to the highest royalty rate attributable to any of the other Master
Recordings embodied on such "Greatest Hits" or "Best of" type Album.
6A.13 Company may not license any Masters hereunder for distribution
through so-called "record clubs" without your prior approval.
6A.14 Company shall not during any XXXXXXXXXX without Your consent, such
consent not to be unreasonably withheld, initially couple more than XXXXXXXXXX
different Masters made hereunder with recordings not embodying Artist's
performances; provided, however, that no more than XXXXXXXXXX of such Masters
will appear on the same Album at the same time. The immediately preceding
sentence shall only apply provided that Your royalty account hereunder is in a
"recouped position" (as such term is commonly understood in the recording
industry) as of the semi- annual accounting period immediately prior to the
semi-annual accounting period when Company initially couples a Master made
hereunder with recordings not embodying Artist's performances. Notwithstanding
the first sentence of this paragraph 6A.13, no such consent shall be required
for "sampler" Records. Furthermore, notwithstanding anything to the contrary
contained herein, Company agrees to use its best efforts to consult with You
prior to engaging in such coupling activities as specifically described in this
subparagraph; provided, however, that the failure of Company to so consult with
You shall not be deemed a breach of this Agreement.
7. NAME AND LIKENESS.
7.01 (a) Company and any person, firm or corporation designated by Company
shall have the right during the Distribution Period and the Sell-Off Period
throughout the Territory to use and to permit others to use the Artist's name
(both legal and professional, and whether presently or hereafter
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
15
used by the Artist), likeness, other identification and biographical material
concerning the Artist, and the name and likeness of any producer or other person
rendering services in connection with Masters recorded by the Artist during the
Term solely for the purposes of trade and advertising; provided, however, that
no such use will be or imply a merchandising tie-in with any goods, wares,
services or institutions other than as such may be specifically authorized
hereunder without Your prior written consent. Company shall have the further
right to refer to the Artist during the Term and for the Territory as Company's
exclusive recording artist and you and the Artist shall in all your and the
Artist's activities in the entertainment field use reasonable efforts to cause
the Artist to be billed and advertised during the Term as Company's exclusive
recording artist. The rights granted to Company pursuant to this paragraph with
respect to the Artist's name, likeness, other identification and biographical
material concerning the Artist shall be exclusive during the Term and
nonexclusive thereafter. Accordingly, but without limiting the generality of
the foregoing, neither you nor the Artist shall authorize or permit any person,
firm, or corporation other than Company to use during the Term the Artist's
legal or professional name or the Artist's likeness in connection with the
advertising or sale of Phonograph Records.
(b) For and in the Territory, neither you or the Artist shall render any
services or authorize or permit your or the Artist's name or likeness or any
biographical material concerning you or the Artist to be used in any manner by
any person, firm or corporation in the advertising, promoting or marketing of
blank magnetic recording tape or any other product or device primarily intended
for home use, whether now known or hereafter developed, which may be used for
the fixation of sound alone or sound together with visual images.
7.02 (a) It is hereby expressly agreed that, as between you, Artist and
Company and with respect to such materials that Company pays for, Company shall
exclusively own and control all materials comprising the artwork (including,
without limitation, art, photographs, graphic designs, etc.) and other items
created or used in connection with the exploitation of Phonograph Records
hereunder (the "Art Materials"), including, without limitation, all copyrights
and the right to secure copyright throughout the world and in perpetuity.
(b) For ten (10) business days prior to Your conducting any negotiation
with any third party with respect to the right to use Your name, portrait,
picture or likeness or other identification of or any used by You in connection
with the manufacture, advertising, sale and/or distribution of non-Record
products ("Merchandising Rights"), You shall enter into good
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
16
faith negotiations with Company with respect to a license of such Merchandising
Rights to Company.
8. ADVANCES.
8.01 All monies paid to you or the Artist or on Your or the Artist's behalf
or with Your or the Artist's permission, authorization or request or that are
specifically deemed Advances hereunder or to or on behalf of any person, firm or
corporation representing you or the Artist, other than royalties payable
pursuant to this Agreement, shall constitute Advances hereunder.
8.02 Within ten (10) business days following the full execution of this
Agreement, Company shall pay to You XXXXXXXXXX, which payment shall be deemed an
Advance against, and shall be fully recoupable from, all royalties (other than
mechanical royalties) otherwise payable hereunder and, furthermore, which
payment shall specifically be deemed to be an Advance against and a prepayment
of any and all applicable union session payments due and owing to Artist in
connection with the recording of the Album required to be recorded and delivered
and otherwise licensed to Company during the Initial Period, if any.
8.03 Within the earlier of (i) ninety (90) business days following the full
execution of this Agreement and (ii) the date by which Company is required to
make the payment to You specifically referred to in Paragraph 8.04 hereinbelow),
Company shall pay to You XXXXXXXXXX, which payment shall be deemed an Advance
against, and shall be fully recoupable from, all royal- ties (other than
mechanical royalties) otherwise payable hereunder and, furthermore, which
payment shall specifically be deemed to be an Advance against and a prepayment
of any and all applicable union session payments due and owing to Artist in
connection with the recording of the Album required to be recorded and delivered
and otherwise licensed to Company during the Initial Period, if any.
8.04 Within twelve (12) business days following the initial release in the
Territory of the First Licensed Master, Company shall pay to You XXXXXXXXXX,
which payment shall be deemed an Advance against, and shall be fully recoupable
from, all royalties (other than mechanical royalties) otherwise payable
hereunder and, furthermore, which payment shall specifically be deemed to be an
Advance against and a prepayment of any and all applicable union session
payments due and owing to You in connection with the recording of the Album
required to be recorded and delivered and otherwise licensed to Company during
the Initial Period, if any.
8.05. Within eleven (11) business days following the commencement of each
Option Period, if any, Company shall pay to
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
17
You XXXXXXXXXX, which payment shall be deemed an Advance against, and shall be
fully recoupable from, all royalties (other than mechanical royalties) otherwise
payable hereunder and, furthermore, which payment shall specifically be deemed
to be an Advance against and a prepayment of any and all applicable union
session payments due and owing to Artist in connection with the recording of
the Album required to be recorded and delivered and otherwise licensed to
Company during such Option Period, if any.
8.06. Within ten (10) business days following the commencement of recording
of each Album required to be recorded and delivered by Artist (or otherwise
licensed by You) to Company during each Option Period, if any, Company shall pay
to You XXXXXXXXXX, which payment shall be deemed an Advance against, and shall
be fully recoupable from, all royalties (other than mechanical royalties)
otherwise payable hereunder and, furthermore, which payment shall specifically
be deemed to be an Advance against and a prepayment of any and all applicable
union session payments due and owing to Artist in connection with the recording
of the Album required to be recorded and delivered and otherwise licensed to
Company during such Option Period, if any.
8.07. Within thirty (30) business days following the delivery of each Album
required to be recorded and delivered by Artist (or otherwise licensed by You)
to Company during each Option Period, if any, Company shall pay to the You an
amount equal to difference between XXXXXXXXXX of the actual Recording Costs for
the Album recorded and delivered and otherwise licensed to Company during the
immediately preceding Contract Period, which payment shall be deemed an Advance
against, and shall be fully recoupable from, all royalties (other than
mechanical royalties) otherwise payable hereunder and, furthermore, which
payment shall specifically be deemed to be an Advance against and a prepayment
of any and all applicable union session payments due and owing to Artist in
connection with the recording of the Album required to be recorded and delivered
and otherwise licensed to Company during such Option Period, if any.
Notwithstanding anything to the contrary contained herein, Company shall not be
required to pay to You an amount in excess of the amounts listed below for the
Albums delivered and otherwise licensed to Company during the Option Periods
listed below:
OPTION PERIOD MAXIMUM PAYMENT TO YOU
------------- ----------------------
FIRST OPTION PERIOD XXXXXXXXXX
SECOND OPTION PERIOD XXXXXXXXXX
THIRD OPTION PERIOD XXXXXXXXXX
FOURTH OPTION PERIOD XXXXXXXXXX
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
18
FIFTH OPTION PERIOD XXXXXXXXXX
8.08 XXXXXXXXXX of all sums paid or incurred by Company in connection with
the independent radio promotion of Phonograph Records hereunder or in connection
with independent publicity relating to Artist, if any, shall be deemed to
constitute Advances hereunder; provided, however, that such recoupable amounts
in connection with the independent radio promotion commitments shall not exceed
XXXXXXXXXX) in connection with any Single nor XXXXXXXXXX in connection with any
Album.
9. ROYALTIES.
9.01 Company will pay you an "all-in" royalty, during the term of copyright
in the country concerned of Masters embodied in Phonograph Records delivered
hereunder computed at the applicable percentage indicated in the Royalty
Schedule below, of the applicable Royalty Base Price in respect of Net Sales of
such Phonograph Records (other than Audiovisual Records) consisting entirely of
Masters licensed under this Agreement during the respective Contract Periods
specified below and sold by Company or Company's permitted licensees through
Normal Retail Channels ("USNRC"):
ROYALTY SCHEDULE
TERRITORY
Masters made during:
the: Long-Play
Albums Singles Singles
First Option Period XXXXXX XXXXXXX XXXXXXX
Second Option Period XXXXXX XXXXXXX XXXXXXX
Third Option Period XXXXXX XXXXXXX XXXXXXX
Fourth Option Period XXXXXX XXXXXXX XXXXXXX
Fifth Option Period XXXXXX XXXXXXX XXXXXXX
The royalty rates set forth in this paragraph 9.01 are sometimes referred
to herein as your "basic royalty rate(s)".
9.02 Notwithstanding anything to the contrary contained in the Royalty
Schedule hereinabove, and with respect to each Album Delivered in fulfillment of
your Recording Commitment hereunder, the royalty rate applicable to USNRC Net
Sales of top-line Albums pursuant to the terms hereof shall be the royalty rate
specified in the Royalty Escalation Schedule below.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
19
ROYALTY ESCALATION SCHEDULE
Album recorded in Net Sales in the Territory of top-
fulfillment of the line Albums (determined in
Recording Commitment accordance with the Company's
for the: standard accounting procedures).
X - XXX,XXX- XXX,XXX- XXX,XXX-
XXX,XXX XXX,XXX XXX,XXX X,XXX,XXX X,XXX,XXX+
------- ------- ------- --------- ----------
First Option
Period XXXXXXX XXXXXXX XXXXXXX XXXXXXXXX XXXXXXXXXX
Second Option
Period XXXXXXX XXXXXXX XXXXXXX XXXXXXXXX XXXXXXXXXX
Third Option
Period XXXXXXX XXXXXXX XXXXXXX XXXXXXXXX XXXXXXXXXX
Fourth Option
Period XXXXXXX XXXXXXX XXXXXXX XXXXXXXXX XXXXXXXXXX
Fifth Option
Period XXXXXXX XXXXXXX XXXXXXX XXXXXXXXX XXXXXXXXXX
9.03 (a) Subject to the terms and provisions set forth in Paragraph 6A.13
hereinabove, the royalty rate on Phonograph Records sold through so-called
"record clubs" shall be XXXXXXXXXX of the otherwise applicable royalty rate if
manufactured and sold by Company, and an amount equal to XXXXXXXXXX of the Net
Royalty from the sale of those Phonograph Records if manufactured and sold by
Company's licensees.
(b) If, pursuant to Company's agreement with any record club licensee
distributing Records hereunder through a direct mail or mail order operation
("Club Agreement") (1) the aggregate number of our Records (including Records
hereunder) distributed thereunder during any particular period of time as "free"
or "bonus" records shall exceed the aggregate number of our Records (including
Records hereunder) sold thereunder during that period (hereinafter such excess
Records are referred to as "Excess Club Records"); and (2) the number of Records
hereunder distributed thereunder during that time period by such licensee as
"free" or "bonus" Records shall exceed the number of records hereunder sold
during that time period by such licensee (hereinafter such excess Records are
referred to as "Excess Club Artist Records") then Company shall credit Your
royalty account hereunder with a portion of the adjusting royalty payment, if
any, made by such licensee to Company in respect of the Excess Club Records
distributed by that licensee during that time
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
20
period, which portion shall be determined by multiplying XXXXXXXXXX by a
fraction the numerator of which shall be the aggregate number of Excess Club
Artist Records distributed by that licensee during that time period and the
denominator of which shall be the Aggregate Qualifying Excess Club Records
(as defined in the following sentence), including Excess Club Artist Records,
distributed by that licensee during that time period. As used in the preceding
sentence, "Aggregate Qualifying Excess Club Records" shall mean the aggregate
number of "free" or "bonus" records in the excess of records sold with respect
to each artist signed to Company (or other royalty participant) whose "free" or
"bonus" records distributed pursuant to a Club Agreement exceed the number of
their records which are sold thereunder during the applicable time period.
9.04 Except as specifically provided for herein, in respect of any Master
Recording licensed by Company to others for their distribution of Phonograph
Records in the Territory, Company will pay You XXXXXXXXXX of Company's net
receipts from Company's licensee. ("Net receipts", in the preceding sentence,
means receipts as computed after deduction of all copyright, AFM and other
applicable third party payments required by law.) If another artist, a producer,
or any other Person is entitled to royalties on sales of such Records, that
payment will be divided among You in the same ratio as that among Your
respective basic royalty percentage rates.
9.05 (a) The royalty rate on any Mid-Price Record will be XXXXXXXXXX of the
applicable basic royalty rate prescribed in paragraph 9.01. The royalty rate on
any Budget Record, any Multiple Record Set, any Premium Record, any Record sold
for distribution through military exchange channels, or any "picture disc"
(i.e., a disc Record with artwork reproduced on the surface of the Record
itself) will be XXXXXXXXXX) of the applicable basic royalty rate prescribed in
paragraph 9.01. The royalty rate on any Record which is not an Album, Single or
a Long-Play Single will be XXXXXXXXXX of the applicable basic Album royalty rate
prescribed in paragraph 9.01. The royalty rate on any digital compact cassette
("DCC") or any Mini-disc Record will be XXXXXXXXXX of the rate which would
otherwise be applicable under this Agreement. The royalty rate for any Record in
a New Configuration will be XXXXXXXXXX the rate which would otherwise be
applicable hereunder. The provisions set forth in the immediately preceding
sentence shall apply until XXXXXXXXXX months following the initial release of
any Master delivered hereunder as embodied on such New Configuration.
Thereafter, the royalty for Records sold in the form of New Configuration shall
be negotiated in good faith by the parties, taking into account, among other
things, the then-prevailing industry standards. Notwithstanding anything to the
contrary contained herein, Company shall have the right to release, distribute
and sell such
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
21
Records prior to the completion of such negotiations, and to accrue royalties
to Your account hereunder at the royalty rate set forth herein. Notwithstanding
anything to the contrary in the immediately two (2) preceding sentences, in the
event Company adopts a general policy applicable to the majority of new artists
signed exclusively to Company which provides for a royalty rate reduction with
respect to records in compact disc or DCC or Mini-disc configuration more
favorable to such new artist than the royalty rate reduction provided herein,
You shall receive the benefit of such general policy, on a prospective basis
only.
(b) The royalty rate applicable to USNRC Net Sales of top-line compact disc
Records will be the below-listed percentage of the rate which would otherwise be
applicable under this Agreement The royalty rate applicable to USNRC Net Sales
of top- line compact disc Albums pursuant to the terms hereof shall be the
percentage of the rate which would otherwise be applicable under this Agreement
as specified in the Compact Disc Royalty Escalation Schedule below.
COMPACT DISC ROYALTY ESCALATION SCHEDULE
Album recorded in Net Sales in the Territory of top-
fulfillment of the line compact disc Albums
Recording Commitment (determined in accordance with
for the: Company's standard accounting
procedures).
X - XXX,XXX- XXX,XXX- XXX,XXX-
XXX,XXX XXX,XXX XXX,XXX X,XXX,XXX X,XXX,XXX+
------- ------- ------- --------- ----------
All Option
Periods XXXXXXX XXXXXXX XXXXXXX XXXXXXXXX XXXXXXXXXX
9.06 (a) Except as otherwise specifically set forth herein, on Masters
licensed by Company on a flat-fee or a royalty basis for the sale of Phonograph
Records or for any other uses, the royalty rate shall be an amount equal to
XXXXXXXXXX of the Net Flat Fee or Net Royalty, as applicable, from such
exploitation of the Masters.
(b) To the extent permissible at law, you hereby assign to Company all
right, title and interest in and to any and all royalties or other payments to
which you are or may become entitled to receive (herein "Your Share") under the
Audio Home Recording Act of 1992, as it may be amended (the "Act"), or any
implementing or similar legislation requiring the payment of copyright royalties
in connection with the sale of recording devices or blank tapes or any other
recordable device (e.g., digital audio tape, DCC). Upon receipt by
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
22
Company of such royalties or payments, Company shall credit your royalty account
with XXXXXXXXXX of Your Share of such royalties or payments received. In order
to effectuate the foregoing, you shall execute and deliver to Company a letter
of direction address to the Register of Copyrights of the U.S. Copyright Office
and you agree to execute and deliver to Company any other document or documents
as may be reasonably necessary to cause the payment to Company of Your Share of
such royalties or payments. It is expressly understood and agreed that except as
provided above in this paragraph 9.06(b), Company shall be entitled to retain
for its own use and benefit any royalties or payments received by Company
pursuant to the Act.
9.07 Audiovisual Royalties shall be computed on the Audiovisual Records
Royalty Base Price; otherwise, in accordance with the provisions of this
Agreement applicable to Conventional Albums and: If manufactured and sold by
Company, XXXXXXXXXX percent on U.S. sales, XXXXXXXXXX percent ex-U.S. If
manufactured and sold by Licensees (in the U.S. or elsewhere), and on
Audiovisual Recordings licensed or otherwise furnished by Company for
exploitation other than on Audiovisual Records, XXXXXXXXXX of Net Receipts.
Audiovisual royalties (and receipts payments) are "all-in" (inclusive of,
without limitation, payments to publishers).
9.08 Notwithstanding anything to the contrary contained in this Article 9:
(a) In respect of Joint Recordings, the royalty rate to be used in
determining the royalties payable to you shall be computed by multiplying the
royalty rate otherwise applicable by a fraction, the numerator of which shall be
one (1) and the denominator of which shall be the total number of royalty
artists whose performances are embodied on a Joint Recording. The term "Joint
Recording" shall mean any Master Recording embodying the Artist's performances
and any performances by another artist with respect to which Company is
obligated to pay royalties. Artist shall not be required to record any such
Joint Recordings without Artist's prior approval.
(b) The royalty rate on a Phonograph Record embodying Masters made
hereunder together with other Masters will be computed by multiplying the
royalty rate otherwise applicable by a fraction, the numerator of which is
the number of Selections embodying Masters made hereunder and contained on
the particular record concerned and the denominator of which is the total
number of Selections contained on such Record. The royalty rate on an
Audiovisual Record containing a Audiovisual Recordings made hereunder and
other audiovisual works will be determined by apportionment based upon
actual playing time on the Record concerned.
(c) No royalties shall be payable to you in respect of Phonograph
Records sold or distributed by Company or Company's
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
23
licensees for promotional purposes, as cut-outs, at close-out prices, for
scrap, XXXXXXXXXX or less of the Record's highest posted wholesale price
(whether or not intended for resale), as "free", "no charge" or "bonus"
Records (whether or not intended for resale), to Company's employees or
those of Company's licensees and their relatives, or to radio stations;
provided, however, that Company's activities in connection with same are
reasonable.
(d) (i) If records derived from the Masters are sold to distributors
or others for less than Company's highest posted wholesale price, or at a
discount therefrom or are distributed to others for resale as "free", "no
charge" or "bonus" Records, but for more than XXXXXXXXXX of such wholesale
price, then, for purposes of this paragraph, a percentage of such records
shall be deemed non-royalty bearing records, which percentage shall be an
amount equal to the percentage of such lesser amount or the applicable
discount. Notwithstanding anything to the contrary contained herein,
Company will not engage or distribute records as "free" or "no charge" or
"bonus" Records (other than in connection with Record Club) without the
prior written consent of You or Artist.
(ii) Company agrees that such special and discount programs for Albums
shall not exceed in the aggregate on a royalty-free basis XXXXXXXXXX of the
aggregate gross units of the particular Album concerned shipped through
USNRC unless Company obtains your consent. If Company exceeds the foregoing
limitation for any particular Album without obtaining your consent, your
sole remedy shall be that you shall be entitled to be paid or credited with
royalties at the applicable royalty rate for all such excess units.
(e) Company may elect from time to time to compute and pay you royalties
hereunder on a royalty base different than the Royalty Base Price provided
herein, as long as such computation does not materially affect the net amount of
royalties otherwise payable to you at that time hereunder.
10. ROYALTY PAYMENTS AND ACCOUNTINGS.
10.01 Company shall send to You statements for royalties payable hereunder
on or before October 1st for the semi-annual period ending the preceding June
30th and on or before April 1st for the semi-annual period ending the preceding
December 31st, together with payment of royalties, if any, earned by You
hereunder during the semi-annual period for which the statement is rendered,
less all the right to retain, as a reserve against charges, credits, or returns,
such portion of payable royalties as shall be reasonable in Company's best
business judgment. With respect to Albums sold hereunder, Company's reserve
shall not
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
24
exceed XXXXXXXXXX of the number of such records shipped. Company shall
have shipped. With respect to Singles sold hereunder, Company's reserve shall
not exceed XXXXXXXXXX of the number of such records shipped, unless Company
reasonably believes a particular release justifies a higher reserve. Reserves
shall be ratably and fully liquidated no later than the end of the XXXXXXXXXX
accounting period following the period in which such reserve was initially
established. Records returned will be apportioned between royalty-free records
and records on which royalties are payable in the same proportion as such
records were shipped to customers. You shall reimburse Company within sixty (60)
days following receipt of Company's demand for any overpayments, and Company may
also deduct the amount thereof from any monies payable to You hereunder (other
than mechanical royalties). Royalties paid by Company on Phonograph Records
subsequently returned shall be deemed overpayments.
10.02 No royalties shall be payable to You on sales of Phonograph Records
by any of Company's licensees or distributors until payment on those sales has
been received by Company in the Territory or Company has received accredit
against a prior advance. Sales by a authorized licensee or authorized
distributor shall be deemed to have occurred in the semi-annual accounting
period during which that authorized licensee or authorized distributor shall
have rendered to Company accounting statements and payments for those sales.
10.03 Intentionally deleted.
10.04 (a) Company will maintain books and records which report the sales of
Phonograph Records, on which royalties are payable to You. You may, but not more
than once a year, at Your own expense, examine and audit those books and
records, as provided in this paragraph 10.04 only. You may make those
examinations only for the purpose of verifying the accuracy of the statements
sent to You under paragraph 10.01. All such examinations shall be in accordance
with GAAP procedures and regulations. You may make such an examination for a
particular statement only once, and only within XXXXXXXXXX years after the date
when Company is required to send You that statement under paragraph 10.01. You
may make such an examination only during Company's usual business hours, and at
the place where Company keeps the books and records to be examined. If You wish
to make an examination You will be required to notify Company at least
XXXXXXXXXX before the date when You plan to begin it. Company may once postpone
the commencement of Your examination for no more than XXXXXXXXXX days by notice
given to You not later than XXXXXXXXXX before the commencement date specified in
Your notice; if Company does so, the running of the time within which the
examination may be made will be suspended during the postponement. If Your
examination has not been completed within
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
25
XXXXXXXXXX from the time You begin it, Company may require You to terminate it
on XXXXXXXXXX notice to You at any time; Company will not be required to permit
You to continue the examination after the end of that XXXXXXXXXX period. You
will not be entitled to examine any manufacturing records or any other records
that do not specifically report sales or other distributions or other commercial
exploitations of the Masters and of Phonograph Records on which royalties are
payable to You. You may appoint a certified public accountant to make such an
examination for You, but not if (s)he or his/her firm has begun an examination
of Company's books and records for any Person except You unless the examination
has been concluded and any applicable audit issues have been resolved. Such
certified public accountant will act only under a Letter of Confidentiality
which provides that any information derived from such audit or examination
will not be knowingly released, divulged or published to any person, firm or
corporation, other than to You or to a judicial or administrative body in
connection with any proceeding relating to this Agreement.
(b) Notwithstanding the penultimate sentence of paragraph 10.04(a), if
Company notifies You that the representative designated by You to conduct an
examination of Company's books and records under paragraph 10.04(a) is engaged
in an examination on behalf of another Person ("Other Examination"), You may
nevertheless have Your examination conducted by Your designee, and the running
of the time within which such examination may be made shall be suspended until
Your designee has completed the Other Examination, subject to the following
conditions:
(i) You shall notify Company of Your election to that effect within
XXXXXXXXXX after the date of Company's said notice to You;
(ii) Your designee shall proceed in a reasonably continuous and
expeditious manner to complete the Other Examination and render the final
report thereon to the client and Company; and
(iii) Your examination shall not be commenced by Your designee before
the delivery to Company of the final report on the Other Examination, shall
be commenced within thirty (30) days thereafter, and shall be conducted in
a reasonably continuous manner.
(The preceding provisions of this paragraph 10.04(b) will not apply if Company
elects to waive the provisions of the penultimate sentence of paragraph 10.04(a)
which require that Your representative shall not be engaged in any Other
Examination.)
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
26
10.05 If You have any objections to a royalty statement, You will give
Company specific notice of that objection and Your reasons for it within
XXXXXXXXXX after the date when Company is required to send You that statement
under paragraph 10.01. Each royalty statement will become conclusively binding
on You at the end of that XXXXXXXXXX period, and You will no longer have any
right to make any other objections to it. You will not have the right to sue
Company in connection with any royalty accounting, or to sue Company for
royalties on Records sold during the period a royalty accounting covers, unless
You commence the suit within that XXXXXXXXXX period. If You commence suit on any
controversy or claim concerning royalty accountings rendered to You under this
agreement in a court of competent jurisdiction (as provided in paragraph 23.09
below), the scope of the proceeding will be limited to determination of the
amount of the royalties due for the accounting periods concerned, and the court
will have no authority to consider any other issues or award any relief except
recovery of any royalties found owing. Your recovery of any such royalties will
be the sole remedy available to You by reason of any claim related to Company's
royalty accountings. Without limiting the generality of the preceding sentence,
You will not have any right to seek termination of this Agreement or avoid the
performance of Your obligations under it by reason of any such claim. The
preceding three (3) sentences will not apply to any item in a royalty accounting
if a court of competent jurisdiction determines that the item was fraudulently
misstated and such determination is not overruled or reversed.
10.06 Company shall have the right to deduct from any amounts payable to
You hereunder that portion thereof as may be required to be deducted under any
statute, regulation, treaty or other law, or under any union or guild agreement,
and You shall promptly execute and deliver to Company any forms or other
documents as may be required in connection therewith.
10.07 Each payment made by Company to You under this Agreement, other than
union scale payments under Article 5 hereof, shall, at Company's election, be
made by a single check payable to TIMTOJAY MUSIC, INC. All payments herein are
contingent upon Company receiving properly completed W-9 and/or 1001 IRS tax
forms, as applicable.
11. MUSICAL COMPOSITION LICENSES.
11.01 You hereby grant to Company and Company's designees an irrevocable
non-exclusive license, under copyright, to reproduce each Controlled Composition
on Phonograph Records and to distribute those Phonograph Records in the
Territory.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
27
11.02 Mechanical royalties shall be payable for each Controlled Composition
on Net Sales of Phonograph Records and at the following rates:
(a) On Phonograph Records sold in the United States, the rate (the "United
States Mechanical Rate") for each Controlled Composition embodied thereon shall
be equal to XXXXXXXXXX percent of the minimum statutory royalty rate provided
for in the United States Copyright Act which is applicable to the reproduction
of Musical Compositions as of the date of the delivery of the first Master
hereunder embodying the Controlled Composition in question, or, if earlier, as
of the date that is sixty (60) days prior to the date upon which that first
Master was required to be delivered hereunder. The term "United States Full
Mechanical Rate" for each Controlled Composition shall be equal to XXXXXXXXXX of
the minimum statutory royalty rate (with respect to a five (5) minute
composition) provided for in the United States Copyright Act which is applicable
to the reproduction of Musical Compositions as of the date of the delivery of
the first Master hereunder embodying the Controlled Composition in question, or,
if earlier, as of the date that is sixty (60) days prior to the date upon which
that first Master was required to be delivered hereunder.
(b) Notwithstanding anything to the contrary contained in the immediately
preceding Subparagraph, the United States Mechanical Rate for each Controlled
Composition on Net Sales of Phonograph Records sold in the United States will be
the below- listed percentage of the minimum statutory rate provided for in the
United States Copyright Act which is applicable to the reproduction of Musical
Compositions as of the date of the delivery of the first Master hereunder
embodying the Controlled Composition in question, or, if earlier, as of the date
that is sixty (60) days prior to the date upon which that first Master was
required to be delivered hereunder:
UNITED STATES MECHANICAL RATE ESCALATION SCHEDULE
Album recorded in Net Sales in the United States of
fulfillment of the top-line Albums (determined in accordance
Recording Commitment with Company's standard accounting
for the: procedures).
X - XXX,XXX- XXX,XXX-
XXX,XXX XXX,XXX X,XXX,XXX
------- ------- ---------
All Option Periods XXXXXXX XXXXXXX XXXXXXXXX
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
28
provided, however, that once Net Sales in the United States of top-line Albums
for all of the Committed Albums hereunder exceeds XXXXXXXXXX Soundscan-measured
units, all Controlled Compositions embodied on Committed Albums that are
recorded and released after that date will be paid at the rate of XXXXXXXXXX the
first record sold, subject to the other limitations and restrictions set forth
herein.
(c) Notwithstanding anything to the contrary contained herein, if you or
Artist or any publishing affiliate of yours or Artists enters into an exclusive
worldwide co-publishing agreement with Company ("Imprint Music Publishing")
pursuant to which Imprint Music Publishing is entitled to retain for its own
account at least XXXXXXXXXX net mechanical licensing income ("Imprint Publishing
Agreement"), then if any Record recorded under this Agreement contains a
Controlled Composition which is XXXXXXXXXX subject to the Imprint Music
Publishing Agreement ("Subject Controlled Composition") paragraphs 11.02(a) will
be deemed modified by deleting "seventy-five (75%) percent of", paragraph
11.02(b) will be deemed deleted and the corresponding limitation set forth in
paragraph 11.03(b) shall be commensurably increased in respect of such Subject
Controlled Composition during the term of the Imprint Music Publishing
Agreement, only.
11.03 Notwithstanding the foregoing:
(a) The mechanical royalty rate for a Controlled Composition contained on a
Mid-Priced Record or a Budget Record shall be XXXXXXXXXX the United States
Mechanical Rate. No mechanical royalties shall be payable on any Phonograph
Records for which no royalties are payable pursuant to Article 9 above;
provided, however, and subject to all other reductions specifically provided for
herein, You shall be paid mechanical royalties in connection with XXXXXXXXXX of
those Records referred to in Paragraph 9.08 (d). No mechanical royalties shall
be payable on any Controlled Composition having a playing time of less than
ninety (90) seconds. No mechanical royalty shall be payable on any work which
consists of an arrangement of a work in the public domain or any more than one
use of any work on a particular Record
(b) The maximum aggregate mechanical royalty rate for all Selections,
including Controlled Compositions, contained on a Phonograph Record for sales in
the United States shall be the product of (1): the United States Full Mechanical
Rate for the first Master recorded in connection with the particular Album or EP
project concerned and (2): XXXXXXXXXX for Albums (containing one (1) or more
discs or the tape equivalent), XXXXXXXXXX for EPs, and XXXXXXXXXX for Singles
and Long-Play Singles, regardless of the number of Selections contained thereon.
If the aggregate mechanical royalty rate applicable to all of the Selections
embodied on any Phonograph Record hereunder shall exceed the applicable maximum
aggregate royalty rate set forth for that
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
29
Phonograph Record, then the aggregate mechanical royalty rate for the Controlled
Compositions, if any, contained thereon shall be reduced by an amount equal to
such excess. If the aggregate mechanical royalty rate applicable to all of the
Selections embodied on that Phonograph Record shall, even as reduced in
accordance with the immediately preceding sentence, still exceed the applicable
maximum aggregate mechanical royalty rate for that Phonograph Record solely on
account of Your or Artist's request or demand, then you shall, within sixty (60)
days following your receipt of Company's demand, pay Company an amount equal to
the additional mechanical royalties payable as a result of that excess and
Company may, in addition to all of Company's other rights or remedies, deduct
that amount from any monies payable by Company hereunder.
11.04 Company will compute Mechanical Royalties on Controlled Compositions
as of the end of each calendar quarter-annual period in which there are sales or
returns of Records on which mechanical royalties are payable to you. On the next
May 15th, August 15th, November 15th, or February 15th, Company will send a
statement covering those royalties and will pay any net royalties which are due.
Mechanical Royalty reserves maintained against anticipated returns and credits
will not exceed the same reserves withheld in connection with the sale of
Records hereunder and will be ratably liquidated within XXXXXXXXXX accounting
periods as above-described. If any overpayment of mechanical royalties is made
to any Person you will reimburse Company for it; Company may also recoup it from
any payments due or becoming due to you. If Company pays any mechanical
royalties on Records which are returned later, those royalties will be
considered overpayments. If the total amount of the mechanical royalties which
Company pays on any Record consisting of Masters made under this agreement
(including mechanical royalties for Compositions which are not Controlled
Compositions) is higher than the limit fixed for that Record under subparagraph
11.03(b), that excess amount will be considered an overpayment also. Paragraphs
10.04 and 10.05 will apply to mechanical royalty accountings.
11.05 You shall, upon Company's request, use Your best efforts cause the
issuance to Company and Company's designees of mechanical licenses to reproduce
on Phonograph Records Selections which are not Controlled Compositions and to
distribute those Phonograph Records in the United States. Those mechanical
licenses shall be at rates and on terms no less favorable to Company and
Company's designees than those contained in the standard mechanical license
issued by the Harry Fox Agency, Inc. or any successor with respect to Phonograph
Records distributed in the United States; provided, however, in no event shall
those rates XXXXXXXXXX of the applicable minimum statutory rates set forth in
paragraph 11.02 above.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
30
11.06 If the copyright in any Controlled Composition is owned or controlled
by a person, firm or corporation other than you, you shall cause that person,
firm or corporation to grant to Company and Company's designees the same rights
as you are required to grant to Company and Company's designees pursuant to this
paragraph.
11.07 You hereby grant to Company and Company's designees at no fee,
royalty, or other cost to Company or Company's designees, the irrevocable,
non-exclusive, worldwide right to reproduce and publicly perform each Controlled
Composition on Audiovisual Recordings, to distribute Audiovisual Records
embodying those Audiovisual Recordings, and to otherwise exploit in any manner
and through any media those Audiovisual Recordings. You shall, upon Company's
request, use Your best efforts to cause the issuance to Company and Company's
designees, at no fee, royalty, or other cost to Company or Company's designees,
the irrevocable, non-exclusive, worldwide right to reproduce and publicly
perform each Selection which is not a Controlled Composition on Audiovisual
Recordings and to distribute Audiovisual Records embodying those Audiovisual
Recordings, and to otherwise exploit in any manner or media those Audiovisual
Recordings. If Company or Company's designees shall pay any such fee, royalty,
or other cost, you shall, upon Company's demand, pay Company the amount thereof,
and Company may, in addition to all of Company's other rights and remedies,
deduct that amount from any monies payable by Company hereunder. Without
limiting the generality of the foregoing, it is understood and agreed that
Company's rights under this paragraph 11.07 include the right to reproduce and
publicly perform, at no fee, royalty or other cost to Company or Company's
designees, Controlled Compositions and Non- Controlled Compositions in
television and/or radio commercials advertising Phonograph Records made
hereunder.
11.08 Any assignment, license or other agreement made with respect to
Controlled Compositions shall be subject to the terms hereof.
12. AUDIOVISUAL RECORDINGS.
12.01 Upon Company's request and subject to Artist's prior commitments, you
shall cause the Artist to appear for the making of Audiovisual Recordings
embodying the Artist's performances on the following terms:
(a) Company and you shall mutually designate the Musical Compositions which
shall be embodied in the Audiovisual Recordings. Company and you shall mutually
approve the producer and director of the Audiovisual Recordings, all other
individuals rendering services in connection with the production of the
Audiovisual Recordings, the storyboard and script for the production of the
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
31
Audiovisual Recordings, and the locations at and the dates on which the
Audiovisual Recordings shall be produced (the "Audiovisual Production
Elements").
(b) Company shall pay the Audiovisual Production Costs in an amount not in
excess of a written budget approved by Company in writing. The Audiovisual
Production Costs shall mean and include all minimum union scale payments made by
Company to the Artist in connection with the production of the Audiovisual
Recordings, all payments which are made by Company to any other individuals
rendering services in connection with the production of the Audiovisual
Recordings, all other payments which are made by Company pursuant to any
applicable law or regulation or the provisions of any collective bargaining
agreement between Company and any union or guild (including, without limitation,
payroll taxes and payments to union pension and welfare funds), all amounts paid
or incurred by Company for studio, hall, location or set rentals, tape, film,
other stock, engineering, editing, instrument rentals and cartage,
transportation and accommodations, immigration clearances, any so-called "per
diems" for any individuals (including the Artist) rendering services in
connection with the production of the Audiovisual Recordings, together with all
other amounts paid or incurred by Company in connection with the production of
the Audiovisual Recordings. To the extent permissible under applicable union
agreements, you and Artist hereby waive any right to be paid union scale
payments in connection with the production of Audiovisual Recordings. The
Audiovisual Production Costs shall constitute Advances hereunder.
(c) The Audiovisual Recordings shall be produced in accordance with the
rules and regulations of all labor unions and guilds having jurisdiction over
the production thereof.
(d) You shall cause the Artist to fully cooperate with Company and
Company's designees and to perform to the best of the Artist's ability in
connection with the production of the Audiovisual Recordings.
(e) If the Audiovisual Production Costs exceed the budget approved by
Company in writing as a result of any cause which is within your or the Artist's
control, or if you or the Artist shall for any reason whatsoever delay the
commencement of or not be available for any scheduled appearance by you or the
Artist relating to the production of the Audiovisual Recordings, you shall,
within sixty (60) days following receipt of Company's demand, pay to Company an
amount equal to the expenses or charges paid or incurred by Company by reason
thereof. Company may, without limiting its other rights and remedies, deduct
that amount from any monies payable by Company hereunder.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
32
(f) Notwithstanding anything to the contrary contained herein, XXXXXXXXXX
of the aggregate amount of Audiovisual Production Costs shall be recoupable from
any and all monies payable to you from the exploitation of Audiovisual
Recordings hereunder. Furthermore, and notwithstanding anything to the contrary
contained herein, XXXXXXXXXX of the Audiovisual Production Costs for each
Audiovisual Recording may be recouped from your royalties on sales of Records
which do not reproduce visual images or other exploitations of audio Masters
("audio royalties").
12.02 Company shall be the sole owner of all worldwide rights in and to
each Audiovisual Recording (including the worldwide copyrights therein and
thereto). Without limiting the generality of the foregoing, it is understood and
agreed that Company's rights to use your name and the name, likeness, and other
identification of the Artist and biographical material concerning the Artist in
the Audiovisual Recordings are set forth in Articles 6 and 7 hereof, wherein the
terms "Masters" and "Phonograph Records" shall include Audiovisual Recordings
and Audiovisual Records, respectively.
12.03 Notwithstanding anything to the contrary contained herein and so long
as the BMG Agreement has not been terminated, lapsed or otherwise expired,
Company agrees to license each Audiovisual Recording produced hereunder to You
solely for promotional use in the Universe outside of the Territory only to BMG;
provided, however, that You will pay to Company XXXXXXXXXX of the total
Audiovisual Production Cost for each Audiovisual Recording that You wish to
so-license as a fee for such license. In the event that You wish to commercially
exploit each such Audiovisual Recording in the Universe outisde of the Territory
only, Company agrees to negotiate the terms of such commercial license with You
in good faith, provided, however, that the initial XXXXXXXXXX above-described
will not be deemed a prepayment of or otherwise applied towards any fee or
royalty that You might otherwise pay to Company in connection with such
commercial license rights. Notwithstanding anything to the contrary contained
herein and solely in connection with each Master Recording released by Company
for which BMG, at any time prior to such release by Company, produced (at its
own and sole expense and cost) an Audiovisual Recording embodying such Master
Recording, Company agrees to license each such Audiovisual Recording that
Company produces hereunder to BMG at 'no charge'. Furthermore, You agree to
cause BMG to register in the name of Company the copyright in and such
Audiovisual Recordings that Company produces and which are licensed to BMG in
each territory of the universe where BMG plans to release, distribute,
manufacture or otherwise exhibit same.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
33
13. WARRANTIES, REPRESENTATIONS AND COVENANTS.
You hereby warrant, represent and covenant that:
13.01 You have the right and power and capacity to enter into this
Agreement, to grant the rights granted by you to Company hereunder, and to
perform all of the terms hereof, and you have not done and shall not do anything
that will impair Company's rights hereunder. Without limiting the generality of
the foregoing, no Musical Composition or any other material recorded by the
Artist shall be subject to any re-recording or other restrictions.
13.02 During the Term you and Artist shall become and remain members in
good standing of any labor union or guilds with which Company may at any time
have an agreement lawfully requiring your or the Artist's membership.
13.03 (a) All recording sessions for the Masters shall be or have been
conducted in all respects in accordance with the terms of the AF of M Phonograph
Record Labor Agreement, of the AFTRA Code for the Phonograph Industry, and of
the agreements with all other labor unions and guilds having jurisdiction over
the recording of the Masters.
(b) The information supplied by you pursuant to paragraph 4.03(b) above
constitutes an accurate and complete listing of all individuals, vocalists,
musicians and other performers whose performances are in fact embodied in such
Masters and a corresponding description of the specified vocal, musical and/or
other performances actually performed by each such person and embodied on such
Masters.
13.04 (a) Your and Artist's names, masters, Selections embodied on masters
and/or materials supplied to Company by you hereunder will not violate or
infringe upon any common law or statutory right of any person, including,
without limitation, any contractual rights, copyrights, rights of privacy,
rights of publicity, trademark rights and rights to trade names. Neither you nor
Artist shall "interpolate", "quote from," "sample", "borrow" or otherwise adapt
any copyrighted music, copyrighted spoken words, copyrighted sounds, copyrighted
words, copyrighted selections and/or copyrighted sound recordings (including,
without limitation, any sounds accompanying copyrighted audiovisual works) owned
or controlled by third parties in Masters ("Embodied Copyrighted Materials")
without having first obtained the written consent of the applicable copyright
proprietors of such Embodied Copyrighted Materials, and your failure to obtain
such written consents shall be deemed a material breach of this Agreement;
provided, always, that if Company, in the exercise of its reasonable business
judgment, believes that Embodied Copyrighted Materials exist without
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
34
such written consent from the applicable copyright proprietors, Company may
withhold monies and/or royalties otherwise payable to you hereunder in amounts
reasonably related to potential third party liability as a result thereof.
(b) Artist is the sole owner of the professional name "Charlie Major" and
no other Person has or will have the right to use such name in connection with
Records during the Term other than Company. You shall not use a different name
in connection with Records unless you and Company mutually agree in writing.
13.05 There are no recordings embodying the Artist's performances which
have not heretofore been commercially released in the Territory on Phonograph
Records which You, Artist, BMG or any third party has the right to release
during the Term of this Agreement.
13.06 Neither you nor the Artist shall at any time, directly or indirectly,
give or offer to give any consideration of any kind to any radio or television
station or network, to any employee thereof, or to any person, firm, or
corporation controlling or influencing that station or network's programming for
the purpose of securing the broadcast or promotion of any Phonograph Records
hereunder.
13.07 Except as otherwise specifically provided herein, Company shall have
no obligation hereunder or otherwise to pay any person, firm, or corporation any
amounts in connection with the exercise of any of Company's rights hereunder,
including, without limitation, Company's rights with respect to the recording or
exploitation of Masters.
13.08 Artist has reached the age of majority prior to the date hereof.
13.09 Intentionally deleted.
13.10 The Masters shall be free of any and all liens or and encumbrances.
13.11 Company's knowledge of facts which if true would constitute a breach
of any warranty, representation or covenant made by you hereunder shall not
impair or otherwise affect Company's entitlement to indemnification pursuant to
paragraph 20 below or its other remedies hereunder.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
35
14. RECORDING RESTRICTIONS.
14.01 During the Term and for the Territory, neither you nor the Artist
shall enter into any agreement or make any commitment which would interfere with
your or the Artist's performance of any of the terms hereof nor shall the Artist
perform for or render services in connection with the recording of any Masters
for any person, firm, or corporation other than Company. After the expiration or
termination of the Term, the Artist shall not, prior to the later of the
following dates, perform for any person, firm or corporation other than us, for
the purpose of making Phonograph Records or Masters, any Selection which shall
have been delivered hereunder: (a) the date XXXXXXXXXX subsequent to the date on
which that Selection shall have been last delivered to Company in a Master
Recording recorded hereunder, or (b) the date XXXXXXXXXX subsequent to the
expiration or termination of the Term (the later date in respect of any
Selection being hereinafter sometimes referred to as the "Restriction Date").
14.02 For the Territory, neither you nor the Artist shall at any time
manufacture, distribute, sell or authorize the manufacture, distribution, or
sale by any person, firm, or corporation other than Company of Phonograph
Records embodying (a) any performance rendered by the Artist during the Term or
(b) any performance rendered by the Artist after the expiration or termination
of the Term of a Selection recorded hereunder if that performance shall have
been rendered prior to the Restriction Date applicable to that Selection.
Furthermore, neither you nor the Artist shall record or authorize or knowingly
permit to be recorded for any purpose any such performance without in each case
taking reasonable measures to prevent the manufacture, distribution, or sale at
any time by any person, firm, or corporation other than Company of Phonograph
Records embodying that performance. Specifically, but without limiting the
generality of the foregoing, if during the Term the Artist performs any
Selection or if after the Term the Artist performs any Selection prior to the
Restriction Date applicable thereto, neither you nor the Artist will authorize
or knowingly permit that Selection to be recorded unless pursuant to a written
contract containing an express provision that neither that performance nor the
recording thereof will be used directly or indirectly for the purpose of making
Phonograph Records. Upon Company's request, you shall promptly deliver to
Company a copy of the pertinent provisions of each such contract and you shall
cooperate fully with Company in any controversy which may arise or litigation
which may be instituted relating to Company's rights pursuant to this paragraph.
14.03 (a) During the Term, the Artist will not render any musical
performances (audiovisual or otherwise) for the purposes of making any motion
picture or other audiovisual work ("Picture", below) for any person, firm or
corporation other than us, and no other person,
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
36
firm or corporation other than Company will be authorized to produce,
distribute, exhibit, or otherwise exploit any Picture which contains any musical
performance (audiovisual or otherwise) by the Artist, without an express written
agreement providing that:
(i) the Picture concerned will not contain performances by the Artist
of more than two (2) Musical Compositions, in whole or in part; and
(ii) not more than one-half (1/2) of any version of the Picture may
consist of featured musical performances (defined below) by the Artist or
anyone else.
(b) "Featured musical performance", in this paragraph, means:
(i) any visual performance of a Musical Composition; and
(ii) any background performance of a Musical Composition which is
intended as a focus of audience attention, whether or not the visual matter
is related dramatically to the lyrics or concept of the Musical
Composition.
14.04 Artist may perform as a background musician ("sideman") accompanying
a featured artist for the purpose of making Phonograph Records for others,
provided:
(a) You have then fulfilled all of your material obligations under this
Agreement, and the engagement does not interfere with the continuing prompt
performance of your obligations to Company.
(b) (1) Artist will not render a solo or "step-out" performance, and
(2) The musical style of the recording will not be substantially similar to
the characteristic musical style of Recordings made by Artist for Company.
(c) Artist will not record any material which Artist has then recorded for
Company, and will not agree to be restricted from recording the same material
for Company.
(d) Artist will not accept the sideman engagement unless the Person for
whom the recordings are being made agrees in writing, for Company's benefit,
that:
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
37
(1) Artist's name may be used in a courtesy credit to Imprint Records on
the Album liners used for such Records, in the same position as the credits
accorded to other sidemen and in type identical in size, prominence and all
other respects; and
(2) Except as expressly provided in section 14.04(d)(1) above, neither
Artist's name (or any similar name), nor any picture, portrait or likeness of
Artist will be used in connection with such Recordings, including, without
limitation, on the front covers of Album containers, on sleeves or labels used
for Singles, or in videos, advertising, publicity or any other form of promotion
or exploitation, without Company's express written consent, which Company may
withhold in its unrestricted discretion.
(e) Before Artist accepts the sideman engagement you will notify Company of
the name of the Person for whom the recordings are being made and the record
company which will have the right to distribute the Records. Your notice will be
addressed to Company's Chief Financial Officer, Vice President Business
Development.
15. CERTAIN OBLIGATIONS WITH RESPECT TO THE ARTIST.
15.01 You have and shall continue to have during the Term the exclusive
right to the Artist's services under an enforceable recording contract (the
"Recording Contract"), a copy of which you shall deliver to Company upon
Company's request. The Recording Contract grants to you all rights necessary to
enable you to perform your obligations hereunder. You shall not impair any of
those rights (by your failure to fully perform your obligations under the
Recording Contract, by your modification or amendment of any terms of the
Recording Contract, by your failure to exercise any options under the Recording
Contract, or otherwise) in derogation of any of Company's rights under this
Agreement. Company may, in your name and on your behalf, exercise or enforce any
of your rights under the Recording Contract.
15.02 You shall be solely responsible for and shall pay to the Artist all
royalties and other compensation which may be payable to the Artist by reason of
the recording, manufacture, distribution and sale throughout the world of
Phonograph Records hereunder or by reason of any other exploitation of the
recordings embodied therein.
15.03 If there shall be a dissolution or liquidation of your assets, or if
a proceeding under any bankruptcy or insolvency law is commenced by, for or
against you, or if there is an appointment of a receiver, liquidator, custodian,
assignee, trustee, sequestrator or any other similar official for you or any of
your assets, or if you attempt to assign, mortgage or pledge any of your assets
for the benefit of your creditors, or if there is a levy, attachment or seizure
of the Masters
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
38
pursuant to an attachment, garnishment, execution or other process of law, or
if you commit any act of bankruptcy or become insolvent, or if you shall, for
any reason, fail to fulfill any of your obligations under this Agreement, then,
Company may, without limiting its other rights and remedies, upon written notice
to you or the Artist, require that the Artist render Artist's services to
Company for the remaining balance of the Term upon the terms herein contained
and the Artist shall thereby be deemed substituted for you as a party to this
Agreement as of the date of Company's notice to you or the Artist. As of the
date of that notice, Company shall have no further obligations or liability to
you under this Agreement, except for such obligation, if any, that Company may
have to pay you royalties with respect to Masters recorded prior to that notice.
With respect to Masters recorded subsequent to the date of that notice, (i) the
royalty rate pursuant to paragraph 9.01(a) above with respect to such Masters
shall be the applicable royalty rate pursuant to such paragraph XXXXXXXXXX with
appropriate reductions and apportionments for singles, club and other ancillary
sales, etc., and without regard to paragraph 9.02 above. Company may recoup all
Advances or other charges against royalties hereunder, regardless of when paid
or incurred, from any royalties payable by Company to you or to the Artist, or
to your or the Artist's designees.
16. UNIQUE SERVICES.
16.01 You expressly acknowledge that your and the Artist's services
hereunder are of a special, unique, intellectual, and extraordinary character
which gives them peculiar value, and that in the event of a breach by you or the
Artist of any term hereof, Company will be caused irreparable injury which
cannot adequately be compensated by money damages. Accordingly, Company shall be
entitled to seek injunctive relief, in addition to any other rights or remedies
which Company may have, to enforce the terms of this Agreement.
17. CERTAIN REMEDIES.
17.01 If you do not fulfill any portion of your Recording Commitment within
the time prescribed in paragraph 3.02, Company will have the following options:
(a) to suspend Company's obligations to make payments to you under this
Agreement until you have cured the default;
(b) to terminate the term of this Agreement at any time, whether or not you
have commenced curing the default before such termination occurs; and
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
39
(c) to require you to repay to Company the amount, not then recouped, of
any Advance previously paid to you by Company and not specifically attributable
under Article 8 to an Album which has actually been fully Delivered.
Company may exercise each of those options by sending you the appropriate
notice. If Company terminates the term under clause 17.01(b) all parties will be
deemed to have fulfilled all of their obligations under this agreement except
those obligations which survive the end of the term (such as indemnification
obligations, re-recording restrictions, and your obligations under clause
17.01(c)). No exercise of an option under this paragraph will limit Company's
rights to recover damages by reason of your default, its rights to exercise any
other option under this paragraph, or any of its other rights.
17.02 If because of: act of God; inevitable accident; fire; lockout, strike
or other labor dispute; riot or civil commotion; act of public enemy; enactment,
rule, order or act of any government or governmental instrumentality (whether
federal, state, local or foreign); failure of technical facilities; illness or
incapacity of any performer or producer; or other cause of a similar or
different nature not reasonably within Company's control; Company is materially
hampered in the recording, manufacture, distribution or sale of records, then,
without limiting Company's rights, Company shall have the option by giving you
notice to suspend the running of the then-current Contract Period for the
duration of any such contingency plus such additional time as is necessary so
that Company shall have no less than thirty (30) days after the cessation of
such contingency in which to exercise its option, if any, to extend the term of
this agreement for the next following Option Period. If any suspension imposed
under this paragraph by reason of an event affecting no Record manufacturer or
distributor except Company continues for more than XXXXXXXXXX you may, by
notice, request Company to terminate the suspension by notice given to you
within XXXXXXXXXX after its receipt of your notice. If Company does not do so,
the term of this Agreement will terminate at the end of that XXXXXXXXXX period
(or at such earlier time which Company may designate by notice to you), and all
parties will be deemed to have fulfilled all of their obligations under this
Agreement except those obligations which survive the end of the term (such as
warranties, re-recording restrictions and Company's obligation to pay
royalties).
17.03 If Company refuses, without cause, to permit you to fulfill your
minimum Recording Commitment for any Contract Period, (irrespective of whether
or not you have commenced recording the particular Album for such Recording
Commitment), other than as a result of an event or contingency referred to in
paragraph 17.01 above, Company shall have no obligations or liabilities to you
in connection therewith unless you shall notify Company of your desire to
fulfill your minimum Recording Commitment for that Contract Period and within
XXXXXXXXXX
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
40
after Company's receipt of that notice Company shall fail to advise you in
writing that Company shall permit you to fulfill your minimum Recording
Commitment for that Contract Period. If Company shall fail to so advise you in
writing that Company shall permit you to fulfill your minimum Recording
Commitment for that Contract Period, the Term shall expire as of the end of that
XXXXXXXXXX period and Company shall have no obligations or liabilities to you
whatsoever in connection with Company's failure to permit you to fulfill your
Recording Commitment for that Contract Period or fails to release the First
Licensed Master hereunder. Company shall, however, pay you promptly after the
expiration of thatXXXXXXXXXX period, as a non-recoupable, non-returnable payment
hereunder XXXXXXXXXX
18. PRODUCER AND OTHER ROYALTIES.
18.01 You shall be solely responsible for and shall pay all royalties and
other Compensation which may be payable to any producers of the Masters or to
any others rendering services in connection with the recording of the Masters.
18.02 Notwithstanding the foregoing, Company will accept a Letter of
Direction (as that term is currently understood in the industry) from You that
provides for the direct payment of royalties (on substantially the same terms as
royalties are payable to You hereunder and taking into account the industry-wide
practice of paying producer's their royalty retroactively to the first record
sold after the recoupment of Recording Costs) on Your behalf to any producers of
the Masters or to any others rendering services in connection with the recording
of the Masters. In that event, Company may deduct any amounts payable by Company
to that producer or director from any royalties or other sums payable by Company
hereunder. Furthermore, for the purposes of the recoupment of any Advances or
charges under this Agreement, the royalty rates contained in Article 9 with
respect to those Masters shall be deemed reduced by the amount of the applicable
royalty rates with respect to Masters which are contained in Your Letter of
Direction to Company in connection with such Producer payments. Any Advances
payable by Company to a producer (or such party) which are not recouped by
Company from royalties payable to that producer may be recouped by Company from
any royalties or other sums payable by Company hereunder.
19. DEFINITIONS.
19.01 The term "Advance" shall mean prepayment of royalties. Company may
recoup Advances from royalties (other than mechanical royalties) to be paid to
you or on your behalf pursuant to this Agreement. Except as otherwise set forth
herein, Advances shall be non-refundable.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
41
19.02 The term "Album" shall mean an audio only long-playing Phonograph
Record which is not an EP, Single, or Long-Play Single, and where the context
requires, Masters sufficient to constitute a long-playing audio only Phonograph
Record.
19.03 The term "Audiovisual Record" shall mean a Record embodying an
Audiovisual Recording.
19.04 The term "Audiovisual Recording" shall mean every form of Master
Recording embodying visual images.
19.05 The term "Container Charge" shall mean the applicable percentage,
specified as follows, of the Gross Royalty Base applicable to the particular
Record concerned: XXXXXXXXXX percent for Singles packaged in color or other
special printed sleeves, and for Albums, EPs, and Long-Playing Singles in disc
form packaged in Company's standard singlefold jackets without any special
elements (such as, but not limited to, plastic, cardboard, or printed inner
sleeves, inserts, or attachments); XXXXXXXXXX thereof for all other Albums, EPs
or Long- Playing Singles in disc form, and for all other sound-only Phonograph
Records in disc form; and XXXXXXXXXX thereof for Audiovisual Records, all
Phonograph Records in tape form, such as reel-to-reel tapes, cartridges,
cassettes (whether audio or video) and for all other recorded devices, but
XXXXXXXXXX for compact disc Records, digital audio tape, DCC, Mini-disc and all
Records in New Configurations.
19.06 The term "Contract Period" shall mean the Initial Period or any
Option Period of the Term (as they may be suspended or extended).
19.07 The term "Controlled Composition" shall mean that portion of a
Musical Composition or other Selection, written or composed by You alone or in
collaboration with others, or which is owned or controlled, in whole or in part,
directly or indirectly, by You or any person firm or corporation in which You
have a direct or indirect interest.
19.08 The terms "Conventional Phonograph Record", "Conventional discs and
tapes" and "Conventional Album" shall refer to discs or tapes of the quality
used for the majority of units of a particular Phonograph Record released. If,
at any particular time, Company has ceased to regularly manufacture plain, black
"vinyl" disc records and only manufactures tapes, compact discs and/or "premium
vinyl" (e.g., so-called "half-speed mastered") discs, then the terms
"Conventional discs" or "Conventional Album in disc form", and the like, shall
refer to conventional tapes.
19.09 The term "delivery to Company" (or "Delivery to Company") or words of
similar connotation used in connection with Master
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
42
Recordings or Masters shall mean delivery to a person designated by Company
at such location or locations designated by Company of fully-mixed, leadered,
sequenced, equalized and unequalized master tapes in proper form for the
production of the parts necessary to manufacture phonograph records therefrom,
which Masters have been approved by Company as satisfactory for the manufacture
and sale of Phonograph Records, and delivery to a person designated by Company
at such location or locations designated by Company of all consents, approvals,
copy information, credits, mechanical licenses and other material and documents
(including those described in paragraph 4.03(b) above) required by Company to
release Phonograph Records embodying those Masters or Masters and to manufacture
album covers or other packaging therefor. Company may (but shall not be
obligated to) send you written notice of the date which Company deems to be the
applicable date of Delivery to Company of any Masters made hereunder. If you
dispute the date of such notice, you shall give notice in writing to Company
within ten (10) business days of Company's notice to you. Your failure to so
notify Company shall be deemed your acceptance of the date contained in
Company's notice. The sending of Company's notice shall be without prejudice to
Company's rights and remedies hereunder if Company later discovers that such
delivery has not been fully and completely made. Company's election to make a
payment to you which was to have been made upon Delivery of Masters or to
release a Record derived from such Master Recording shall not be deemed to be
its acknowledgment that such "Delivery" was properly made and Company shall
not be deemed to have waived either its right to require such complete and
proper performance thereafter or its remedies for your failure to perform in
accordance therewith.
19.10 The term "EP" shall mean an audio only Phonograph Record embodying no
fewer than five (5) different Musical Compositions and no more than seven (7)
different Musical Compositions.
19.11 The term "Long-Play Single" shall mean an audio only Phonograph
Record embodying no more than four (4) different Musical Compositions.
19.12 The term "Master Recording" shall mean every form of recording,
whether now known or unknown, embodying sound, or sound accompanied by visual
images, which may be used in the recording, production, or manufacture of
Phonograph Records.
19.13 The term "Masters" shall mean Master Recordings embodying the
performances of the Artist recorded hereunder.
19.14 (a) The term "Mid-Priced Record" shall mean a Phonograph Record which
bears a Gross Royalty Base at least XXXXXXXXXX than the Gross Royalty Base
applicable to Company's then-current highest
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
43
prevailing "top-line" record of comparable repertoire and in the same
configuration (e.g., Album, Multiple Record Set, Long Play Single, tape
cassette, compact disc, etc.) released by Company or Company's licensees in
the territory concerned.
(b) The term "Budget Record" shall mean a Phonograph Record which bears a
Gross Royalty Base XXXXXXXXXX than the Gross Royalty Base applicable to
Company's then-current highest prevailing "top line" record of comparable
repertoire and in the same configuration (e.g., Album, Multiple Record Set, Long
Play Single, tape cassette, compact disc, etc.) released by Company or Company's
licensees in the territory concerned.
19.15 The term "Multiple Album" shall mean an Album which contains two (2)
or more units of a particular configuration of Record, which is sold as a single
unit.
19.16 The terms "Musical Composition" and "Composition" shall mean a single
musical composition and, for the purposes of computing mechanical royalties
hereunder, shall include medleys and spoken word pieces. Different versions of a
Composition embodied on the same Phonograph Record will be considered one (1)
Composition (and one(1) Selection) for all purposes hereunder.
19.17 The term "Net Receipts" shall mean an amount equal to the gross
monies received by Company in the Territory from a person, firm or corporation
from the exploitation by that person, firm or corporation of rights in
Audiovisual Recordings (including any monies received by Company for the use of
Audiovisual Recordings in Audiovisual Records) less XXXXXXXXXX of those gross
monies as a distribution fee, and less all costs paid or incurred by Company in
connection with the exploitation of those rights and the collection of those
monies.
19.18 The term "Net Royalty" or "Net Flat Fee" shall mean the gross royalty
or gross flat fee received by Company in the Territory from a person, firm or
corporation from the exploitation by that person, firm or corporation of rights
in Masters (other than Audiovisual Recordings), less all costs paid or incurred
by Company in connection with the exploitation of those rights and the
collection of those monies, and less all royalties or other sums payable by
Company to any person, firm or corporation in connection with the exploitation
of those rights, except for royalties or other sums payable to producers of
those Masters, which shall be borne solely by you.
19.19 The term "Net Sales" shall mean XXXXXXXXXX of gross sales to
wholesale and retail customers, less returns, credits and reserves against
anticipated returns and credits.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
44
19.20 The term "Net Sales through Normal Retail Channels" shall refer to
Net Sales of Phonograph Records hereunder through Company's principal
distributor in the country in question for resale through record or other retail
stores for which a royalty is paid hereunder (and, without limiting the
generality of the foregoing, shall exclude sales or distributions referred to in
paragraph 9.03, 9.04 and 9.05 above);
19.21 The terms "Phonograph Record" and "Record" shall mean every form of
reproduction, whether now known or unknown, embodying sound alone, or sound
accompanied by visual images, distributed primarily for home use, school use,
jukebox use, and use in means of transportation, including, without limitation,
discs of any speed or size, reel-to-reel tapes, cartridges, cassettes, or other
pre-recorded tapes.
19.22 The term "New Configuration" shall mean any configuration of record
not specifically referred to herein.
19.23 The term "Royalty Base Price" shall mean the amount specified below
("Gross Royalty Base") applicable to the Phonograph Records concerned, less all
excise, purchase, value added, or similar taxes (included in the Royalty Base
Price) and less the applicable Container Charge.
(a) WITH RESPECT TO RECORDS SOLD FOR DISTRIBUTION IN THE TERRITORY: The
Gross Royalty Base for an Audiovisual Record is the amount computed under
section (1) below. The Gross Royalty Base for a Record reproducing sound only is
the amount computed under section (1) or section (2) below, whichever is
XXXXXXXXXX
(1) Company's published subdistributor price applicable to the price
series of the unit concerned at the commencement of the accounting period
in which the sale occurs; or
(2) XXXXXXXXXX of the prevailing industry suggested retail list price
applicable to Records in the same configuration and the same wholesale
price category as the unit concerned. In this section (2):
(i) A "similar U.S. Record company" means one which does not
distribute its own Records directly to wholesalers and retailers on a
nation-wide basis throughout the Territory but does so through a third
party distribution company.
(ii) The "wholesale price" of a Record distributed by another similar
U.S. record company means its published
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
45
price corresponding most closely in amount to a subdistributor price for
a Record in the same configuration published by Company.
(iii) The "wholesale price category" of a Record distributed by
Company includes: (A) that Record; and (B) Records in the same
configuration sold by other similar U.S. record companies whose wholesale
prices for those Records correspond most closely in amount to our published
subdistributor price for the Company-distributed Record concerned.
(iv) "Prevailing industry suggested retail list price" means the
average of the suggested retail list prices assigned to Records in the
wholesale price category concerned by the similar U.S. Record company(ies)
which publish suggested retail list prices or, if there are no such
suggested retail list prices, the prevailing retail equivalent prices
generally accepted in the record industry applicable to the Records in the
wholesale price category concerned.
Royalties will be calculated separately with respect to each price series
in which units of a particular Record release are sold during the semiannual
accounting period concerned. References to published prices in this section
refer to those in effect at the commencement of the accounting period concerned.
19.24 The term "Selection" shall mean a Musical Composition, poem, dramatic
work, comedy routine, or other verbal expression.
19.25 The term "Single" shall mean an audio-only seven (7") inch disc
Phonograph Record or its tape or other equivalent, embodying no more than two
(2) Compositions.
19.26 The word "Territory" shall mean the United States of America, its
territories and possessions.
19.27 The words "licensed by Company to others for their distribution of
Phonograph Records" shall mean sales through channels other than through
Company's primary sub-distributor.
19.28 The term "Person" "person" or "Party" shall mean any individual,
corporation, partnership, association or other organized group of persons or the
legal successors or representatives of the foregoing.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
46
20. INDEMNITY.
20.01 You hereby indemnify, save, and hold Company harmless from any and
all damages, liabilities, costs, losses and expenses (including legal costs and
reasonable attorneys' fees) arising out of or connected with any claim, demand
or action which is inconsistent with any of the warranties, representations,
covenants or agreements made by you in this Agreement, which has resulted in a
final judgment or has been settled with your written consent (it being
understood that your consent shall be deemed given to any settlement not in
excess of XXXXXXXXXX. Notwithstanding the foregoing, if you withhold consent to
any settlement which Company is willing to make, the foregoing indemnity shall
apply and Company may settle such claim in its sole discretion unless you
promptly assume all costs of defending against such claim, demand or action
including, without limitation, court costs, reasonable attorneys' fees, and
direct expenses theretofore incurred by Company in connection with said claim,
demand or action; provided that in the event you assume said costs, Company
shall nonetheless have the right to settle such claim, demand or action in its
sole discretion without your consent, provided that, in such event, the
foregoing indemnification shall not apply with respect thereto. You shall
reimburse Company, on demand, for any payment made by Company at any time with
respect to any damage, liability, cost, loss or expense to which the foregoing
indemnity applies. Pending the determination of any claim, demand or action,
Company may, at its election, withhold payment of any monies otherwise payable
to you hereunder in an amount which does not exceed your potential liability to
Company pursuant to this paragraph; provided, however, that if you shall deliver
to Company an indemnity or surety bond, in a form and with a company acceptable
to Company, which in respect of such claim, demand or action shall cover the
amount of such claim, demand or action and Company's estimated attorneys' fees
and legal costs in connection therewith, then Company shall not withhold payment
of monies otherwise payable to you hereunder in respect of such claim, demand or
action; and provided further that Company shall liquidate any such withheld
amounts if within twelve (12) months no lawsuit has been commenced and active
settlement discussions are not then taking place. You may participate in the
defense of any claim referred to in this paragraph 20 through counsel of your
selection at your own expense, but Company will have the right at all times, in
its sole discretion, to retain or resume control of the conduct of the defense
of such claim.
21. ASSIGNMENT.
21.01 (a) Company shall have the right, at its election, to assign any of
Company's rights hereunder, in whole or in part, to any subsidiary, affiliated,
controlling or other related company, and to any Person, firm or corporation
owning or acquiring a majority or controlling portion of Company's stock, and
any rights so assigned may
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
47
also be assigned by the assignee. Company shall also have the right to assign
any of its rights hereunder to any of its licensees solely in order to
effectuate the purposes hereof.
22. NOTICES.
22.01 All notices to be given to you hereunder and all statements and
payments to be sent to you hereunder shall be addressed to you at the address
set forth on page 1 hereof or at such other address as you shall designate in
writing from time to time. All notices to be given to Company hereunder shall be
addressed to Company to the attention of the Chief Financial Officer/Vice
President Business Development at the address set forth on page 1 hereof or at
such other address as Company shall designate in writing from time to time. All
notices shall be in writing and shall either be served by personal delivery,
mail, or telegraph, all charges prepaid. Except as otherwise provided herein,
notices shall be deemed given when personally delivered, mailed, or delivered to
a telegraph office, all charges prepaid, except that notices of change of
address shall be effective only after actual receipt. A copy of all notices to
you shall be sent to Graham Henderson & Associate, Barristers and Solicitors,
438 University Avenue, Suite 1812, Toronto, Ontario M5G 2K8, provided, however,
the inadvertent failure to send any such copy shall neither impair the
effectiveness of the notice sent nor constitute a breach of this Agreement.
23. MISCELLANEOUS.
23.01 (a) This Agreement sets forth your and Company's entire understanding
relating to its subject matter and all prior and contemporaneous understandings
relating to the same have been merged herein. No modification, amendment,
waiver, termination or discharge of this Agreement or any of its terms shall be
binding upon Company unless confirmed by a document signed by a duly authorized
officer of Company. No waiver by you or Company of any term of this Agreement or
of any default hereunder shall affect your or Company's respective rights
thereafter to enforce that term or to exercise any right or remedy in the event
of any other default, whether or not similar.
(b) If any part of this Agreement is determined to be void, invalid,
inoperative or unenforceable by a court of competent jurisdiction or by any
other legally constituted body having jurisdiction to make such determination,
such decision shall not affect any other provisions hereof, and the remainder of
this Agreement shall be effective as though such void, invalid, inoperative or
unenforceable provision had not been contained herein. If the payments provided
by this Agreement shall exceed the amount permitted by any present or future law
or governmental order or regulation, such stated payments
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
48
shall be reduced while such limitation is in effect to the amount which is so
permitted; and the payment of such amount shall be deemed to constitute full
performance by Company of its obligations to you and Artist hereunder with
respect to compensation during the term when such limitation is in effect.
23.02(a) Company shall not be deemed to be in breach of any of Company's
obligations hereunder unless and until you shall have given Company specific
written notice by certified or registered mail, return receipt requested,
describing in detail the breach and Company shall have failed to cure that
breach within thirty (30) days after Company's receipt of that written notice.
(b) Except with respect to: (i) (intentionally deleted), (ii) your
warranties hereunder, (iii) where a specific cure provision is provided herein,
(iv) breaches incapable of being cured, or (v) an application for injunctive
relief, the failure by you to perform any of your obligations hereunder shall
not be deemed a breach of this Agreement unless Company gives you written notice
of such failure to perform and such failure is not corrected within thirty (30)
days from the date you receive such notice.
23.03 Company's payment obligations under this Agreement are conditioned
upon your full and faithful performance of the terms hereof.
23.04 Wherever your approval or consent is required hereunder, that
approval or consent shall not be unreasonably withheld. Company may require you
to formally give or withhold approval or consent by giving you notice of
Company's request that you do so and by furnishing you with the information or
material in respect of which the approval or consent is sought. You shall give
Company written notice of your approval or disapproval or of your consent or
non-consent within five (5) days after Company's notice is sent and, in the
event of your disapproval or non-consent, your notice shall contain the specific
reasons therefor. Your failure to give Company notice as aforesaid shall be
deemed to be consent or approval, as the case may be, with respect to the matter
submitted.
23.05 Nothing herein contained shall constitute a partnership, joint
venture or other agency relationship between you and Company. Except as
otherwise expressly provided herein, you and the Artist are performing your
obligations hereunder as independent contractors. Neither party hereto shall
hold itself out contrary to the terms of this paragraph, and neither you nor
Company shall become liable for any representation, act or omission of the other
contrary to the provisions hereof. You do not have the right to execute any
agreement or incur any obligation for which Company may be liable or otherwise
bound.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
49
23.06 This Agreement shall not be deemed to give any right or remedy to any
third party whatsoever unless that right or remedy is specifically granted by
Company in writing to that third party.
23.07 The provisions of any applicable collective bargaining agreement
between Company and any labor union or guild which are required by the terms of
that agreement to be included in this Agreement shall be deemed incorporated
herein as if those provisions were expressly set forth in this Agreement.
23.08 Except as otherwise expressly provided herein, all rights and
remedies herein or otherwise shall be cumulative and none of them shall be in
limitation of any other right or remedy.
23.09 This Agreement has been entered into in the State of Tennessee, and
its validity, construction, interpretation and legal effect shall be governed by
the laws of the State of Tennessee applicable to contracts entered into and
performed entirely within the State of Tennessee. All claims, disputes or
disagreements which may arise out of the interpretation, performance or breach
of this Agreement shall be submitted exclusively to the jurisdiction of the
state courts of the state of Tennessee or the Federal District Courts located in
Davidson County; provided, however, if Company is sued or joined in any other
court or forum (including an arbitration proceeding) in respect of any matter
which may give rise to a claim by Company hereunder, you and Artist consent to
the jurisdiction of such court or forum over any such claim which may be
asserted by Company. Any process in any action or proceeding commenced in the
courts of the State of Tennessee arising out of any such claim, dispute or
disagreement, may among other methods, be served upon you by delivering or
mailing the same, via certified mail, addressed to you at the address given in
this Agreement or such other address as you may from time to time designate by
notice in conformity with Article 22 herein.
23.10 This Agreement shall not become effective until signed by you and
countersigned by a duly authorized officer of Company.
23.11 (a) The paragraph headings herein are solely for the purpose of
convenience and shall be disregarded completely in the interpretation of this
Agreement or any of its terms.
(b) No deletion, addition, revision, change or other alteration in drafts
of this Agreement prepared prior to the execution of this Agreement shall be
used for the purpose of construction or interpretation of any term, provision or
language of this Agreement.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
50
23.12 Company may at any time during the Term obtain, at Company's cost,
insurance on the lives of Artist. Company or its designees shall be the sole
beneficiary of that insurance and neither you, nor any member of the Artist, nor
any person, firm or corporation claiming rights through or from you or the
Artist shall have any rights in that insurance. You shall cause Artist to submit
to such physical examinations and to complete and deliver such forms as Company
may reasonably require and otherwise to cooperate with Company fully for the
purpose of enabling Company to secure that insurance.
23.13 From time to time at Company's request, you shall cause Artist to
appear for photography, artwork and similar sessions under the direction of
Company or Company's duly authorized agent, appear for interviews with such
representatives of newspapers, magazines and other publications, and of
publicity and public relations firms as Company may arrange, and confer and
consult with Company regarding Artist's performances hereunder and other matters
which may concern the parties hereto. Artist shall also, if requested by
Company, be available for personal appearances (including performances) on
radio, television, record stores and elsewhere, and to record taped interviews,
spot announcements, trailers and electrical transcriptions, all for the purpose
of advertising, promoting, publicizing and exploiting records released or to be
released hereunder and for other general public relations and promotional
purposes related to the record business of Company or Company's subsidiary and
related companies. Neither you nor Artist shall be entitled to any compensation
from Company for such services, other than minimum union scale to Artist if such
payment is required by applicable agreements.
23.14 You acknowledge that there exists no formal or informal fiduciary
relationship between you and Company and that there exists no special
relationship of trust and confidence between you and Company independent of the
contractual rights, duties and obligations set forth in this Agreement, and that
the future course of dealing between you and Company shall neither explicitly
nor implicitly indicate such a relationship or the undertaking of any such
extra-contractual duties or obligations by Company.
23.15 If Artist's voice should be or become materially and permanently
impaired or if Artist should otherwise become physically or mentally disabled in
performing, recording and/or personal appearances and/or if Artist should cease
to pursue a career as an entertainer, Company may elect to terminate this
agreement, by notice to you at any time during the period in which such
contingency arose or continues and thereby be relieved of any liability for the
executory provisions of this agreement.
23.16 Upon the termination of XXXXXXXXXX
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
51
24. Exclusive License of Existing Masters:
a. For purposes of this Agreement the term "First Licensed Album" and
"Second Licensed Album" shall mean and refer to those certain Masters owned or
controlled by You and listed in Schedule "1" hereto.
b. With respect to the First Licensed Album and the Second Licensed Album
and all "sound recordings", "phonorecords" and "copies" manufactured therefrom
(individually and collectively called the "Licensed Work"),Company shall have
the exclusive right to and to authorize others to manufacture, sell, distribute
and advertise Phonograph Records embodying the Licensed Work under any
trademarks, trade names or labels, and to lease, license, convey or otherwise
use or dispose of the Licensed Work by any method now or hereafter known in any
field of use and to perform publicly Phonograph Records and other reproductions
embodying the Licensed Work, all upon such terms as Company may approve, or
Company may refrain from doing any or all of the foregoing.
c. The following provisions shall apply to the Licensed Masters:
(i) The First Licensed Album and the Second Licensed Album
(and all Delivery Materials with respect thereto) shall be
delivered to Company in accordance with the provisions of
this Agreement hereof no later than thirty (30) days
following the execution of this Agreement.
(ii) The First Licensed Album and the Second Licensed Album
shall be subject to all of the terms and conditions of this
Agreement applicable to masters recorded and delivered
under this Agreement, including without limitation Company's
rights to exploit the Licensed Masters as provided herein,
Your right to receive royalties hereunder with respect to
sales of records embodying or derived from the First
Licensed Album and the Second Licensed Album, if any and the
mechanical royalty provisions. Notwithstanding anything to
the contrary contained herein, Company agrees to pay You in
connection with records manufactured from the First Licensed
Album and the Second Licensed Album an "all-in" royalty on
net sales of records manufactured from the First Licensed
Album and the Second Licensed Album delivered
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
52
hereunder at the applicable rates specified in the Royalty
Schedule below. You agree to be solely responsible for and
pay all royalties and/or other sums due to Artist and
Producer and all other artists, musicians, performers and
producer(s) which are or may become due by reason of
Company's exploitation of the masters delivered hereunder.
ROYALTY ESCALATION SCHEDULE
Album: Net Sales in the Territory of top- line
Albums through normal retail channels
(determined in accordance with
Company's standard accounting
procedures).
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
1st Licensed Album XXXXXXX XXXXXXX XXXXXXX XXXXXXX
2nd Licensed Album XXXXXXX XXXXXXX XXXXXXX XXXXXXX
(iii) With respect to the Licensed Masters, You represent and warrant to
Company as follows:
(A) You are the sole owner of the Licensed Masters and of all performances
embodied therein exclusively, perpetually and throughout the Territory; and no
other person, firm or corporation has any rights in or to the Licensed Masters
or any copy thereof; and You have the right to license the First Licensed Album
and the Second Licensed Album exclusively to Company on all of the terms and
conditions hereof.
(B) There are no liens, encumbrances and/or obligations upon or in
connection with the First Licensed Album or the Second Licensed Album other than
the rights licensed to Company herein; and in connection with the recording of
the First Licensed Album and the Second Licensed Album (A) all costs of
recording have been paid in full and (B) all of the performers whose services
were rendered in connection with the recording of the First Licensed Album and
the Second Licensed Album were contractually free to record phonograph records
of the selection embodied in the First Licensed Album and the Second Licensed
Album for You. At Company's request, You shall furnish Company with copies of
all
X = CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
53
instrumentalist, vocalist, arranger and other employment contracts and/or
session reports showing that all payments have been made in a timely fashion to
the proper parties thereunder. You will hold Company harmless from any and all
liability, loss, damage, cost or expenses (including but not limited to
attorney's fees and court costs) arising from, connected with or related to Your
warranties, representations and agreements with regard to the First Licensed
Album and the Second Licensed Album.
(C) During the Term and the Distribution Period, neither You nor any person
acting for You or with Your authorization or acquiescence (other than Company)
will manufacture, distribute or otherwise exploit records in the Territory
embodying or derived from the First Licensed Album and the Second Licensed
Album, except with the express permission of Company.
(D) You and Artist were and are under no disability, restriction or
prohibition respecting musical works embodied on the First Licensed Album and
the Second Licensed Album to be delivered to Company hereunder.
(E) You have the right to enter into this entire agreement with respect to
the First Licensed Album and the Second Licensed Album and You have not done or
permitted to be done anything which may curtail or impair any of the rights
granted to Company herein.
d. You agree to deliver to Company, concurrently with Your delivery of the
First Licensed Album and the Second Licensed Album to Company and at no charge
to Company, all artwork relating to the First Licensed Album and the Second
Licensed Album. Company shall have the right in its sole discretion and without
payment obligations of any kind, to utilize such artwork in the manufacture of
records from the First Licensed Album and the Second Licensed Album or to
refrain therefrom. You represent and warrant that the aforesaid artwork and
Company's commercial use of the same will not infringe upon the rights of any
third party.
e. Notwithstanding anything to the contrary contained herein, and for the
avoidance of doubt, Company shall have the same rights with respect to the First
Licensed Album and the Second Licensed Album that is has with respect to all
other Committed Albums hereunder.
f. Royalties otherwise payable with respect to First Licensed Album and the
Second Licensed Album shall be applied against royalties or sums due with
respect to the Masters hereunder.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
54
g. With respect to the First Licensed Album and the Second Licensed Album,
You agree to indemnify Company against, and hold Company harmless from, any and
all claims, liabilities, causes of action, damages, expenses, costs of defense
(including reasonable attorney's fees and court costs) and other costs arising
out of or in any way related to any breach or claimed breach of any
representation, warranty or agreement by You contained in this Agreement. You
agree that Company may withhold sums otherwise due You hereunder in amounts
reasonably related to such claim(s) until such time as such claim(s) are reduced
to a final judgment by a court of competent jurisdiction or are settled. In the
alternative, You or Artist may post a bond in an amount and form reasonably
satisfactory to Company, and thereupon Company shall promptly release all monies
withheld in connection with the applicable claim. Company shall give You prompt
notice of all such claims and You shall have the right to participate in the
defense thereof by counsel of its choice at Your expense. In the event any such
claim does not mature into litigation within one (1) year, all sums previously
withheld from You with respect to such claim shall be promptly paid to You.
25. BMG AGREEMENT
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXX
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
55
IN WITNESS WHEREOF, the parties hereto have this day signed in the spaces
provided below.
TIMTOJAY MUSIC, INC. IMPRINT RECORDS
- ------------------------- ------------------------------
By: By:
AN AUTHORIZED SIGNATORY
----------------------
Title
----------------------
Fed. Tax I.D. No.
----------------------
Print Name
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
56
EXHIBIT "A"
IMPRINT RECORDS, INC.
209 10th Avenue South, Suite 500
Nashville, Tennessee 37203
Dated as of: __________________
Gentlemen:
Pursuant to an exclusive recording contract (the "Recording Contract")
between TIMTOJAY MUSIC, INC. ("Company") and me, Company is entitled to my
exclusive services as a recording artist and is the sole owner of the entire
worldwide right, title and interest in and to the results and proceeds of my
services as a recording artist under the Recording Contract, including, without
limitation, master recordings embodying my performances and the phonograph
records derived therefrom. I have been advised that Company is entering into
a written agreement with you (the "Agreement"), pursuant to which Company is
agreeing to furnish my services as a recording artist exclusively to you and
pursuant to which you shall be the sole owner of the right, title and interest
in and to the results and proceeds of my services as a recording artist in the
Territory, its territories and its possessions.
In consideration of your entering into the Agreement, and as a further
inducement for you to do so, it being to my benefit as a recording artist that
you enter into the Agreement, I hereby represent and agree as follows:
1. (a) I have read the Agreement in its entirety and fully understand the
Agreement and all of the terms thereof were explained to me before signing this
document.
(b) Company has the right, insofar as I am concerned, to enter into the
Agreement and to assume all of the obligations, warranties and undertakings to
you on the part of Company contained therein, and Company shall continue to have
those rights during the term of the Agreement and thereafter until all of those
obligations, warranties and undertakings shall have been fully performed and
discharged.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
57
(c) All of the obligations, warranties and undertakings covenants and
agreements on the part of Company contained in the Agreement which concern
Company or me are true and correct.
(d) I shall fully and to the best of my abilities perform and discharge all
of the obligations, warranties and undertakings contained in the Agreement
insofar as the same are required of me and to the extent Company has undertaken
to cause the performance and discharge by me of those obligations and
undertakings.
2. If during the term of the Agreement or any extensions or renewals
thereof, Company shall, for any reason, cease to be entitled to my services as a
recording artist or the results and proceeds thereof in accordance with the
terms thereof or Company shall, for any reason, fail or refuse to furnish my
services as a recording artist or the results and proceeds thereof exclusively
to you as and when required under the Agreement or Company shall commit any
action or omission proscribed in paragraph 15.04 of the Agreement, I shall, at
your written request, for the remaining balance of the term of the Agreement
upon the terms contained therein, be deemed substituted for Company as a party
to the Agreement as of the date of your notice to me. Without limitation of the
foregoing, in the event I am substituted in place of Company as a party to the
Agreement, I shall render all services and perform all acts as shall give to you
the same rights, privileges and benefits to which you are entitled under the
Agreement as if Company had continued to be entitled to my services as a
recording artist and had continued to furnish my services as a recording artist
and the results and proceeds thereof exclusively to you as and when required
under the Agreement, and such rights, privileges and benefits shall be
enforceable in your behalf against me.
3. You and any person, firm or corporation designated by you shall
have the perpetual, worldwide right to use and to permit others to use my name
(both legal and professional, and whether presently or hereafter used by me),
likeness, other identification and biographical material concerning me, for
purposes of trade and advertising solely as specifically authorized in the
Agreement. You shall have the further right to refer to me during the term of
the Agreement as your exclusive recording artist in the Territory, and I shall
in all my activities in the entertainment field use reasonable efforts to be
billed and advertised during the term of the Agreement as your exclusive
recording artist. The rights granted to you pursuant to this paragraph with
respect to my name, likeness, other identification and biographical material
concerning me shall be exclusive during the term of the Agreement and
nonexclusive thereafter. Accordingly, but without limiting the generality of the
foregoing, I shall not authorize or permit any person, firm or corporation other
than you to use during the term of the Agreement my legal or professional name
or my likeness in
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
58
connection with the advertising or sale of phonograph records
(including, without limitation, audiovisual records).
4. During the term of the Agreement, I shall not enter into any agreement
or make any commitment which would interfere with my performance of my
obligations under the Agreement, and I shall not perform or render services in
connection with the recording of master recordings for any person, firm or
corporation other than you. After the expiration or termination of the term of
the Agreement, I shall not prior to the later of the following dates perform for
any person, firm or corporation other than you, for the purpose of making
recordings of phonograph records, any selection which has been delivered under
the Agreement: (a) the date XXXXXXXXXX subsequent to the date on which that
selection shall have been last delivered to you in a master recording recorded
under the Agreement; or (b) the date XXXXXXXXXX subsequent to the expiration or
termination of the term of the Agreement.
5. No termination of the Agreement shall diminish my liability or
obligation hereunder without your written consent.
6. You may, in your name, institute any action or proceeding against me
individually or collectively, at your election, to enforce your rights under the
Agreement, under this guarantee or under the Recording Contract.
7. Company expressly acknowledges that Company's and my services hereunder
and under the Agreement are of a special, unique, intellectual and extraordinary
character which gives them peculiar value, and that if Company or I breach any
term hereof or of the Agreement, you will be caused irreparable injury which
cannot adequately be compensated by money damages. Accordingly, you shall be
entitled to seek injunctive relief, in addition to any other rights or remedies
which you may have, to enforce the terms hereof or of the Agreement.
8. I shall look solely to Company for any and all royalties, recording fees
or other monies payable to me in respect of the recording of all recordings
under the Recording Contract and under the Agreement and in respect of your
manufacture, distribution, sale or other use or recordings recorded under the
Agreement and all phonograph records and other reproductions derived therefrom,
all throughout the world.
9. I, on behalf of myself and on behalf of any publisher or other person or
entity which has or may have any interest in or to any Controlled Composition
(as defined in the Agreement) hereby license to you mechanical reproduction
rights with respect to each Controlled Composition upon the terms and at the
mechanical royalty rates applicable to Controlled Compositions licensed to you
by Company as set forth in Article 11 of the Agreement.
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
59
10. This agreement has been entered into the State of Tennessee, and its
validity, construction, interpretation and legal effect shall be governed by the
laws of the State of Tennessee applicable to contracts entered into and
performed entirely within the State of Tennessee. All claims, disputes or
disagreements which may arise out of the interpretation, performance or breach
of this agreement shall be submitted exclusively to the jurisdiction of the
state courts of the state of Tennessee or the Federal District Courts located in
Davidson County; provided, however, if you are sued or joined in any other court
or forum (including an arbitration proceeding) in respect of any matter which
may give rise to a claim by you hereunder, I consent to the jurisdiction of such
court or forum over any such claim which may be asserted by you. Any process in
any action or proceeding commenced in the courts of the State of Tennessee
arising out of any such claim, dispute or disagreement, may among other methods,
be served upon me by delivering or mailing the same, via certified mail.
Very truly yours,
CHARLIE MAJOR
Social Security Number:
Birth Date:
We Consent To The
Foregoing Insofar
As It Concerns Us:
- --------------------------------
By: TIMTOJAY MUSIC, INC.
Its:
---------------------------------
AN AUTHORIZED SIGNATORY
X = CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
60