<PAGE>
As filed with the Securities and Exchange Commission on November 19, 1999
Registration No. 333- 87291
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
ANTRA HOLDINGS GROUP, INC.
(Name of small business issuer in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 7389-1106 22-3517670
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
1515 Locust Street
Philadelphia, Pennsylvania 19102
215-732-1300
(Address and telephone number of principal executive offices and
place of business)
JOSEPH M. MARRONE, JR., President
Antra Holdings Group, Inc.
1515 Locust Street
Philadelphia, Pennsylvania 19102
215-732-1300
(Name, address and telephone number of agent for service)
---------------------
Copies to:
MICHAEL D. DIGIOVANNA, Esq.
PARKER DURYEE ROSOFF & HAFT
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
---------------------
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this Registration Statement
If this Form is filed to register additional securities for an Offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same Offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same Offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [X]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Class Maximum Maximum
of Securities Amount to be Offering Price Aggregate Amount of
to be Registered Registered(1) Per Security(2) Offering Price(2) Registration Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.001
per share ................... 6,870,000 $ 5.625(3) $ 38,643,750(3) $ 10,742.96(5)
- -------------------------------------------------------------------------------------------------------------
Common Stock, par value $0.001
per share ................... 400,000 $ 7.8125(4) $ 3,125,000(4) $ 868.75
- -------------------------------------------------------------------------------------------------------------
Totals ................... 7,270,000 -- $ 41,768,750 $ 11,611.71
</TABLE>
================================================================================
(1) Pursuant to Rule 416(a), the Registration Statement also relates to an
indeterminate number of additional shares of the Registrant's Common Stock,
issuable upon the conversion of notes or the exercise of warrants pursuant
to anti-dilution provisions contained therein, which shares of Common Stock
are registered hereunder.
(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended (the "Securities
Act").
(3) Estimated offering price based on the average of the bid and asked prices as
of September 15, 1999.
(4) Estimated offering price based on the average of the bid and asked prices as
of November 12, 1999.
(5) This part of the registration fee was paid with the original filing of this
SB-2 on September 17, 1999.
<PAGE>
PROSPECTUS
7,270,000 Shares
ANTRA HOLDING GROUP, INC.
Common Stock
---------------------
Stockholders of Antra Holdings Group, Inc. named under the caption
"Selling Security Holders" may offer and sell up to 7,270,000 shares of our
common stock.
Investing in Antra Holdings's common stock is risky. See "Risk Factors" on
page 6.
Our common stock current trades on the NASD OTC Bulletin Board under the
symbol "RECD."
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved of these Securities or passed upon the
adequacy or accuracy of the Prospectus. Any representation to the contrary is
a criminal offense.
The date of this Prospectus is November 19, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY ..................................................................... 3
RISK FACTORS ........................................................................... 5
Antra Holdings has limited operating revenues and an accumulated deficit ............ 5
We have significant capital requirements and may need to raise additional capital ... 5
CAPITALIZATION ......................................................................... 6
USE OF PROCEEDS ........................................................................ 6
SELECTED FINANCIAL DATA ................................................................ 6
MARKET INFORMATION ..................................................................... 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...................................... 7
BUSINESS ............................................................................... 9
SELLING SECURITY HOLDERS ............................................................... 15
PLAN OF DISTRIBUTION ................................................................... 17
MANAGEMENT ............................................................................. 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ......................... 19
DESCRIPTION OF SECURITIES .............................................................. 20
CERTAIN TRANSACTIONS ................................................................... 21
LEGAL MATTERS .......................................................................... 21
EXPERTS ................................................................................ 21
ADDITIONAL INFORMATION ABOUT ANTRA HOLDINGS ............................................ 22
</TABLE>
2
<PAGE>
PROSPECTUS SUMMARY
Antra Holdings Group, Inc. is a holding company. Through our wholly owned
subsidiary, Antra Music Group, Inc., we produce, acquire, license and distribute
high-quality recorded music. Antra Music was formed in 1997 and entered into an
agreement with Ricardo Brown, the urban recording artist known as "Kurupt". We
primarily focus on urban music, the area of the industry that includes hip-hop,
rap and rhythm and blues. We believe, based on industry sources and census data,
that this area offers significant growth and profit potential.
The music business consists of several functions: publishing, production,
manufacturing, licensing, distribution and promotion. Antra is involved in
these areas.
On July 26, 1999, Antra and Teltran International Group Ltd. announced a
joint venture, Recordstogo.com. We expect it to begin operations in November
1999. Recordstogo.com will market records on its website.
When we refer to "Antra," "we," "our" and "us" in this prospectus, we mean
Antra Holdings Group, Inc. including its subsidiary, Antra Music Group, Inc.,
unless otherwise indicated by the context.
Our offices are located at 1515 Locust Street, Philadelphia, Pennsylvania
19102 and our telephone number is 215-732-1300.
The Offering
<TABLE>
<S> <C> <C>
Shares outstanding before the
offering ....................... 11,544,620 Does not include shares subject to outstanding
convertible notes or warrants, some of which shares
may be sold under this prospectus after conversion
of these notes or the exercise of these warrants.
Maximum number of shares
offered ........................ 7,270,000 Includes shares subject to (1) outstanding
convertible notes and warrants and (2) convertible
notes and warrants that may be issued after the
effectiveness of the Registration Statement.
Shares to be outstanding after the
offering ....................... 18,814,620 Includes shares subject to outstanding convertible
notes and warrants that may be issued after the
effectiveness of the Registration Statement and sold
under this prospectus.
The terms of our notes require us to register more
shares than may be actually issued and sold under
this prospectus. The actual number of shares that
will be issued depends upon the price of Antra's
common stock at the time of conversion
Use of Proceeds .................. ---- Except upon exercise of warrants, Antra will not
receive proceeds. Any proceeds will be used for
working capital purposes.
Symbol for common stock .......... RECD
</TABLE>
3
<PAGE>
Summary Financial Information
<TABLE>
<CAPTION>
YEAR ENDING NINE MONTHS
DECEMBER 31, ENDING SEPTEMBER 30,
------------------------------- -------------------------------
1998 1997 1999 1998
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Income ....................................... $ 20,000 $ 0 $ 56,120 $ 0
Expenses ..................................... 1,415,107 592,369 1,158,759 518,042
(Loss) from operations ....................... (1,395,107) (592,369) (1,102,669) (518,042)
Net (loss) ................................... (1,595,107) (592,369) (367,729) (518,042)
(Loss) per share ............................. (0.17) (0.28) (0.03) (0.06)
Shares used in computing net
loss per share ............................... 9,268,030 2,130,593 11,544,210 9,544,210
BALANCE SHEET DATA: ..........................
Working capital (deficit) .................... $ (75,030) $ 81,314 $ 4,932,028 $ 529,326
Total assets ................................. 122,286 127,913 8,301,437 621,254
Total long-term debt ......................... 1,217,079 597,333 1,016,858 743,604
Total stockholders' equity (deficit) ......... (1,205,321) (470,314) 4,426,950 (128,256)
</TABLE>
4
<PAGE>
RISK FACTORS
Before you decide to invest in Antra Holdings's common stock, you should be
aware that there are various risks, including those described below. You should
carefully consider these risks as well as the more detailed information
contained in this prospectus and in other documents we file with the Securities
and Exchange Commission before making your decision. You should be in a position
to risk losing your entire investment.
Antra Holdings has limited operating revenues and an accumulated deficit.
Our activities since inception have been primarily limited to development
of the artists and the joint venture and the initial release. Our accumulated
deficit at September 30, 1999 was approximately $2,572,250. We incurred a loss
in 1998 of $1,595,107 and a loss from operations of $1,102,669 for the first
nine months of 1999. There can be no assurance that Antra will be able to
operate profitably.
Our revenues have been heavily dependent on one artist's recordings.
On November 16, 1999, we released "Tha Streetz Is A Mutha," the second
album by Kurupt and the only record we have released independent of our former
joint venture with A&M. Kurupt is Antra's best-known recording artist, and our
future plans envision other projects involving Kurupt. Although we have other
artists whose recordings are in various stages of production, none are as well
known as Kurupt. To date, Antra has not marketed albums on behalf of these other
artists, so it cannot predict how these artists will be received by record
buyers. Therefore, Antra depends on the commercial success of Kurupt's current
and future work and Kurupt's continuing ability and willingness to create
recordings for us.
Each record we produce is financed separately.
Our business plan includes the release of a series of records in calendar
year 2000. To accomplish this, we will have to spend significant amounts of
money for manufacturing and production costs, for which we will have to obtain
capital in advance. We cannot assure you that we will be able to arrange
financing on acceptable terms when we need it. The amount of our return with
respect to each record we produce depends to a great extent on whether we obtain
financing and the terms of the financing. For example, for the record we
released on November 16, 1999, our distributor has provided some of this
financing in exchange for a greater fee based on a percentage of profits. The
distributor will also provide some financing for the record we are scheduled to
release in February 2000.
5
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization at September 30, 1999.
This section should be read in conjunction with the financial statements and
related notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
September 30, 1999
Actual
-------------------
<S> <C>
Long-Term Liabilities:
Subordinated Convertible Notes ................................ $ 1,000,000
Other long-term indebtedness .................................. 16,858
------------
Total long-term indebtedness ................................ $ 1,016,858
============
Preferred Stock, $.001 par value; 5,000,000 authorized; none
issued and outstanding ....................................... $ 0
Common Stock, $.001 par value; 50,000,000 shares
authorized; 11,544,210 shares issued and outstanding ......... 11,544
Additional paid-in capital .................................... 6,987,656
Accumulated deficit ........................................... (2,572,250)
------------
Total stockholders' equity .................................. $ 4,426,950
============
</TABLE>
USE OF PROCEEDS
Antra Holdings will not receive proceeds from the sale of the shares
offered hereby. Any proceeds received upon exercise of warrants will be
utilized as working capital.
SELECTED FINANCIAL DATA
The following selected financial information is derived from the audited
financial statements of Antra Holdings. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
YEAR ENDING NINE MONTHS
DECEMBER 31, ENDING SEPTEMBER 30,
------------------------------- -------------------------------
1998 1997 1999 1998
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS: .....................
Income ....................................... $ 20,000 $ 0 $ 56,120 $ 0
Expenses ..................................... 1,415,107 592,369 1,158,789 518,042
(Loss) from operations ....................... (1,395,107) (592,369) (1,102,669) (518,042)
Net (loss) ................................... (1,595,107) (592,369) (367,729) (518,042)
(Loss) per share ............................. (0.17) (0.28) (0.03) (0.06)
Shares used in computing net (loss)
per share ................................... 9,268,030 2,130,593 11,544,210 9,544,210
BALANCE SHEET DATA:
Working capital (deficit) .................... $ (75,030) $ 81,314 $ 4,932,028 $ 529,326
Total assets ................................. 122,286 127,913 8,301,437 621,254
Total long-term debt . ....................... 1,217,079 597,333 1,016,858 743,604
Total stockholders' equity (deficit) ......... (1,205,321) (470,314) 4,426,950 (128,256)
</TABLE>
6
<PAGE>
MARKET INFORMATION
Our common stock is currently quoted on the OTC Bulletin Board under the
symbol "RECD."
Set forth below are the high and low closing bid quotations for our common
stock for the periods indicated as reflected on the electronic bulletin board.
Such quotations reflect interdealer prices without retail mark-up, mark-down or
commissions, and may not reflect actual transactions.
Period Ending High Low
- ------------- ------ -----
September 30, 1999 .......... $ 7.50 $ 4.50
June 30, 1999 ............... 4.50 1.25
March 31, 1999 .............. 3.75 1.75
December 31, 1998 ........... 5.125 1.50
September 30, 1998 .......... 5.875 4.25
June 30, 1998 ............... 5.875 5.00
March 31, 1998 .............. 6.00 4.50
December 31, 1997 ........... 5.00 3.25
September 30, 1997 .......... 5.75 2.625
June 30, 1997 ............... 5.75 0.50
March 31, 1997 .............. 1.50 1.125
As of November 17, 1999, there were approximately 95 recordholders of the
our common stock, although we believe that there are more than five hundred
beneficial owners of our common stock. There are no shares of preferred stock
currently outstanding.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements and related notes contained elsewhere in this
prospectus.
This prospectus contains forward-looking statements.
We intend to identify forward-looking statements in this prospectus using
words such as "believes," "intends," "expects," "may," "will," "should," "plan,"
"projected," "contemplates," "anticipates," or similar statements. These
statements are based on our beliefs as well as assumptions we made using
information currently available to us. You should not place undue reliance on
these forward-looking statements, which apply only as of the date of this
prospectus.
Because these statements reflect our current views concerning future
events, these statements involve risks, uncertainties and assumptions. Actual
future results may differ significantly from the results discussed in the
forward-looking statements. Some, but not all, of the factors that may cause
these differences include those discussed in the Risk Factors section beginning
on page 5 of this prospectus. These include, among others,
o acceptance of the artist and the style of music
o ability to produce and release records
o ability to promote products
o ability to sign new artists
o need for additional financing
o the success of our Recordstogo.com joint venture.
7
<PAGE>
General
Prior to October 1998, we were essentially a development-stage company.
Therefore comparisons between 1998 and 1997 are of limited value.
On November 16, 1999 we released Kurupt's new album, "Tha Streetz Iz A
Mutha." The album was the first album we released independent of our former
joint venture with A&M. Our plan of operation for the year 2000 is to release
another 3 to 5 records. We have scheduled the release of our second independent
album, the original soundtrack to the upcoming motion picture "Once in the
Life," for February 22, 2000. Our subsequent release is the debut album by
Sheeba Black, which is expected to be in March 2000.
We also plan to continue to sign new artists, to produce and release
additional records, to operate our Recordstogo.com joint venture, and to develop
our music-publishing business.
Nine months ended September 30, 1999 compared to nine months ended September 30,
1998 (unaudited)
We had a net loss during the nine months ended September 30, 1999 of
$367,729, compared to a net loss in the first nine months of 1998 of $518,042.
The increase was primarily a result of the $725,000 payment we received as part
of the settlement of our joint venture with A&M.
Our net loss from operations for the nine-month period in 1999 was
$1,102,669, compared to the $518,042 net loss from operations we had in the same
period of 1998. Our revenue was $56,120 for the nine months ended September 30,
1999 while we received no revenue in the comparable period of 1998.
Our operating expenses during the first three quarters of 1999 were
approximately $1,158,789 compared to approximately $518,042 during the same
period in the prior year. However, a significant amount of overhead expenses
were reimbursed in 1998. Factoring out these reimbursed expenses, there would
have been a decrease in operating expenses primarily as a result of reduced
salaries, promotional costs and consulting expenses.
Since Antra did not commence income producing operations until the second
half of 1998, we do not believe that the data for the nine months ended
September 30, 1998 are any indication of our future operations.
Fiscal year 1998 compared to fiscal year 1997
Our revenue was approximately $20,000 for 1998 while we received no revenue
in 1997.
Our operating expenses during 1998 were approximately $1,415,107 compared
to approximately $592,369 during the prior year. In both 1998 and 1997, we
incurred substantial expenses as Antra Music negotiated agreements and
arrangements with various artists. In 1998, we incurred expenses in setting up
our joint venture with A&M. The joint venture incurred expenses in connection
with the signing of the artist, Kurupt, and with the recording, production,
promotion and distribution of his album, Kuruption. All expenses were written
off as incurred, in accordance with industry practice.
Since Antra did not commence income producing operations until 1998, we do
not believe that either 1997 or 1998 are any indication of our future
operations.
Liquidity
Antra had a working capital deficit of $75,030 at December 31, 1998 and
working capital of $4,932,028 at September 30, 1999. The increase in working
capital resulted from payments received upon the termination of its joint
venture with A&M. In July 1999, Antra received $2,766,666 in gross proceeds from
the sale of secured convertible notes. Antra used net cash of $1,441,633 in its
operating activities for 1998 and $1,925,848 for the nine months ended September
30, 1999. Antra has used cash primarily to fund the recording, production,
promotion and distribution of its first record.
8
<PAGE>
We require significant working capital to produce, manufacture, promote and
distribute our music. To date we have satisfied our working capital requirements
through borrowing including our borrowing through the private placement in July
1999. We believe we will require additional working capital in connection with
our album to be released in February 2000 and our other albums to be released
thereafter. We anticipate that we will receive additional funding by exercising
our option to require the investors in the July private placement to lend
additional amounts.
In November 1999, these investors permitted us to accelerate part of this
option. As a result, we received $800,000 in gross proceeds from the private
placement of additional secured convertible notes to these investors. Our option
to require the loan of the balance of these funds is subject to certain
conditions. If these conditions are not met we may be compelled to seek funding
elsewhere. There is no assurance we will be able to do so.
Our need for working capital for the recently released Kurupt album and for
our next record has been reduced by services and funding provided by our
distributor under our distribution agreement. Under this agreement, the
distributor agreed to advance funds for the manufacture of our records and to
provide personnel for the marketing and promotion of these records. While we
have benefitted from these terms, our percentage participation in revenues
derived from these albums is reduced by the degree to which the distributor
advances additional funding. Unless our working capital position improves, we
may be compelled to rely on our relationship with the distributor.
BUSINESS
Introduction
Antra Holdings Group, Inc. is a holding company. Through our wholly owned
subsidiary, Antra Music Group, Inc., we produce, acquire, license and distribute
high-quality recorded music. Antra Music was formed in 1997 to promote urban
contemporary music. Also in 1997, Antra Music entered into an agreement with
Ricardo Brown, the urban recording artist known as "Kurupt". We primarily focus
on urban music, the area of the industry that includes hip-hop, rap and rhythm
and blues. We believe, based industry sources and census data, that this area
offers significant growth and profit potential.
Hip-Hop or Urban Music was the most dynamic segment of the contemporary
music industry in 1997. The Recording Industry Association of America (RIAA)
figures, compiled by Chilton Research Services, show Hip-Hop or Urban with the
largest percentage increase in consumer record purchases, accounting for 10.1%
of total shipments or $1.23 billion. This figure represents an increase of more
than 250% over ten years.
Through a joint venture with A&M Records, we released our first recording
in October 1998. This was a two-CD set by our primary artist, Kurupt, entitled
"Kuruption." Kuruption sold approximately 400,000 copies. A&M terminated the
joint venture after its parent company, Polygram Holding Group, merged with
Seagrams. A&M transferred to us all of its rights in the former joint venture's
agreements with Kurupt and Baby S, but retained exclusive ownership of all
rights to recordings made prior to the termination.
We entered into an agreement with Artemis Records on July 28, 1999. The
distribution agreement replaces our former joint venture and enables us to
retain exclusive ownership of all of our master recordings.
We have recording contracts with several other artists including The
Spooks, El-Drex and Baby S. El-Drex also signed a co-publishing agreement.
Additionally, we have various arrangements with other artists, including Roscoe,
Dawna, Sloppy Joe and Crush.
Antra plans to enter into or has commenced several different ancillary
businesses:
o We have established a publishing subsidiary to receive revenues generated
from the publication of our artists.
o We are in the process of establishing a "Recordstogo.com" joint venture.
See page 12 below.
o We may in the future produce and sell music videos.
9
<PAGE>
Structure of the Music Industry
The music business consists of several functions: publishing, production,
manufacturing, licensing, distribution and promotion.
Publishing. The process begins when a songwriter writes a piece of music
and agrees with a publishing company to market the work to the industry. By
contracting for the rights to music written by different songwriters, the
publishing company builds a library of music, known as a catalog. The publishing
company markets its music catalog to producers, artists and record companies,
and collects royalties on each recording of the music that is sold.
Antra currently has co-publishing agreements with several artists. Under
these publishing agreements, Antra and the artist jointly own certain
compositions, in equal shares. Antra can exploit the compositions in any
commercial manner. Antra is entitled to all gross receipts earned by a
composition, but must pay fifty percent (50%) of the net income to the artist.
Antra recently established a publishing subsidiary.
Production. Once the record company decides to record a song with a
performing artist, the record company underwrites the costs associated with
producing a market-ready recording (master recording) of the song. This entails
paying for recording studio time, hiring studio musicians and paying sound
mixers to edit the tape. The artist is responsible for delivering satisfactory
master recordings to the record company.
Antra's joint venture with A&M produced Kurupt's initial album,
"Kuruption." Antra released "Tha Streetz Iz A Mutha," Kurupt's second album with
tracks produced by Daz Dillinger and Dr. Dre, on November 16, 1999. We also plan
two releases in the first quarter of 2000 and expect to release 3 to 5 other
albums during the balance of 2000.
Manufacturing. Once a master is completed, the record company contracts
with a manufacturer or duplicator of recording formats to make multiple copies.
Antra contracts with others to manufacture its records or arranges for
manufacturing through an agreement with its distributor. Amounts advanced by the
distributor for the manufacture of Antra's next album will be repaid out of the
revenues from the sale of this album.
Licensing. Antra, like many other recorded music ventures, will license the
musical works it intends to sell. This means that Antra will purchase the right
to reproduce and sell the musical works in exchange for royalties paid to the
music publisher and artist.
Distribution. Once copies have been completed, the record company's
distribution system stocks, sells or markets, takes orders for and delivers the
copies of the recording to distribution outlets. In many ways, distribution is
the most critical function in the record business, since distributors provide
the access to, and thereby control, the marketplace. Distribution can be divided
into two distinct categories: Traditional and Non-traditional.
Traditional outlets include small independent record stores, leased
departments of large retail stores, and large chain record stores.
Non-traditional outlets are also known as alternative distribution.
Independent retail outlets not served by traditional distributors, direct
response marketing and Internet sales comprise the bulk of non-traditional
sales. Non-traditional outlets are a rapidly growing area of distribution.
Promotion. Once the record is ready for market it must be promoted to
ensure sales upon distribution. The traditional and most effective means of
promoting recorded music is by radio airplay. Obtaining radio air play for a new
release is an extremely competitive process. As radio stations increasingly
focus on specific music formats, it is becoming easier for independent producers
to target the stations that are most likely to air a particular new recording.
In a number of markets, hiring independent regional promoters can be quite
effective in gaining airplay for a release. Public and college radio stations
are useful venues for promoting lesser-known artists. Music video air play on
MTV or VH-1, or other video stations or programs, is essential to the commercial
success of recording music artists and their records. Promoting urban
contemporary music may involve more-direct promotional efforts in urban
communities. For example, albums may be promoted at local dance clubs.
10
<PAGE>
Songs that are aired on a major radio station are chosen by the program
director, often in conjunction with a format consultant. Once a recording is
aired, the amount of repeat play it receives depends on listener requests and
feedback, as well as actual sales data. Since listener response and sales depend
in large measure how often a release is aired, building a commercial hit depends
on an ongoing cycle of air play and sales. Nurturing this cycle requires
constant marketing attention and careful coordination with advertising, concert
schedules and other promotional activities. Other promotional tools include
print advertising, retail promotions and concert tours.
The key to finding an audience for new for new artists is to properly
coordinate all these promotional activities to maximize awareness and exposure.
Antra will, where possible, use its in-house expertise to direct, coordinate or
assist with the promotional activities of its artists in order to keep its costs
down. In conjunction with its first release with its distributor, Artemis, Antra
will utilize the promotional and marketing personnel of Artemis and its
affiliates. By coordinating or providing assistance with these activities, to
the extent practicable, in-house, costs will be further kept under control.
The recorded-music industry has special risks.
As a recent entrant into the recorded-music business, we will be subject to
all the risks of establishing a new business. Additionally, there are particular
risks common in the recorded music industry. For example:
o Each recording is an individual artistic work. Commercial success is
primarily determined by consumer taste, which is unpredictable and
constantly changing. Accordingly, we cannot assure you as to the financial
success of any particular release, the timing of such success or the
popularity of any particular artist.
o Changes in the timing of new releases can cause significant fluctuations in
quarterly operating results. We cannot assure you that we will be able to
generate sufficient revenues from successful releases to cover the costs of
unsuccessful releases.
o It is industry practice to sell recorded music products on a returnable
basis. We will primarily follow this practice in the future. We may have to
establish reserves for future returns of products based on our return
policies and return experience. If more of our product gets returned that
we anticipate in these reserves, it could adversely affect our results of
operations.
o The business of manufacturing records can be transformed as new
technologies affect the formats used to make copies of recordings. The
development of new formats often positively impacts growth. Sales of vinyl
LP records have been nearly extinguished by cassettes and CDs. We expect
that new formats employing digital technology -- for example, digital
audiotape and downloadable MP3 -- will gain wider acceptance in the near
future. Digital formats offer the ability to make nearly perfect copies of
recordings.
Therefore, while we believe the development of these formats should have a
positive overall effect on our industry, we are concerned that unauthorized
reproduction of recordings using these technologies could have a negative
effect.
Talent development has special risks.
o Antra Music has entered into recording contracts with several artists. We
cannot assure you that we will be able to attract additional artists. We
may not be able to develop our talent successfully or in such a manner that
produces significant sales.
o To secure the services of music artists, we will have to pay advances
consistent with industry standards. If an artist's album does not sell
well, or if the artist fails to produce an album, a producer generally
cannot recover the amount of the advance already paid to the artist. We
cannot assure you that any of the artists to whom we make advances will
produces sales revenues for us. Even if they do, the revenue may not be
sufficient to recoup any advances we have made to them.
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o Any artist developed by Antra Music might request a release from his or her
agreement with us. The artist's contractual obligations are highly personal
and creative in nature, so it is not feasible to force an unwilling artist
to perform the terms of his or her contract. If we sign an artist and later
lose that artist, it could have a materially adverse effect on the company.
Our joint venture with A&M and its termination
On April 1, 1998, Antra Music and A&M Records, a division of Polygram,
formed a joint venture called Wall Street Records LLC. A&M and Antra each owned
50% of the joint venture. The joint venture was intended to be a vehicle by
which Antra Music and A&M could produce, manufacture and distribute recordings
and related materials through Polygram's worldwide distribution channels.
However, A&M terminated the joint venture after Polygram merged with Seagrams.
A&M was to be responsible for significant periodic contributions towards
the joint venture's operating budget for expenses associated with new recording
albums produced by the joint venture's recording artists. The joint venture was
to cover significant costs of promotion and production that Antra would
otherwise have to bear alone.
In accordance with the agreement that terminated the joint venture:
o Antra transferred to A&M all of its interest in the joint venture's
limited liability company;
o A&M paid Antra $725,000;
o A&M transferred to us all of its rights in the former joint venture's
agreements with Kurupt and Baby S, but retained exclusive ownership of
all rights to recordings made prior to the termination;
o A&M disclaimed any rights to several artists previously submitted to the
joint venture by Antra.
New Distribution Agreement
On July 29, 1999 Antra Music entered into a three-year distribution
agreement with Artemis Records. The distribution agreement replaces Antra's
former joint venture and enables it to retain exclusive ownership of all of its
master recordings. Artemis further distributes records though RED Distribution,
Inc., a division of Sony.
The distribution agreement makes Artemis the exclusive distributor of one
album by Kurupt and one other album by an Antra artist to be determined. Artemis
will advance funds for the manufacture of the first album to be produced under
this agreement. The advance will be repaid out of the proceeds of the sale of
the record. To secure the repayment of these advances, Antra has granted Artemis
a security interest in inventory, production parts and components and accounts
receivable from Artemis under the agreement.
In general, Artemis will receive a distribution fee based upon a percentage
of total sales under the agreement, less returns, credits, rebates and reserves.
The percentage is reduced if net sales exceed $10,000,000 in any given contract
year. The percentage is further reduced if net sales exceed $20,000,000 in any
given contract year.
Under our distribution agreement, the distributor agreed to advance funds
for the manufacture of our records and to provide personnel for the marketing
and promotion of these records. While we have benefitted from these terms, our
percentage participation in revenues derived from these albums is reduced by the
degree to which the distributor advances additional funding.
Artemis will warehouse Antra's inventory of these records and will fulfill
orders and distribute these records through the industry's normal retail
channels in the United States. Artemis will also handle all returns of the
applicable records.
Recordstogo.com
On July 26, 1999, Antra Holdings and Teltran International Group Ltd.
announced a joint venture, Recordstogo.com. We are equal co-owners with Teltran
in this joint venture, although we will grant a minority interest to a supplier.
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Recordstogo.com has completed the basic design of its website. Initially,
Recordstogo.com will be utilized as a vehicle to sell records belonging to an
unaffiliated third party. We expect to begin sales by December 1999. We expect
Recordstogo.com to generate revenues through the sale of records, advertisements
and music merchandise. Additionally, visitors to the website can:
o Buy records and CDs from a database of music titles ranging from the
early days of vinyl recordings to present-day CDs. At first this database
will contain approximately 360,000 titles, although we expect it to grow
significantly by year-end 1999;
o Download music in MP3 and other formats;
o Purchase "hard-to-find" records and CDs and sell used records and CDs to
others in our auction house;
o Buy music memorabilia and possibly other entertainment products,
including videos;
o Listen to interviews with musical artists from all generations; and
o Discuss music and the music industry in our interactive chat rooms.
Recording Agreements
Antra has recording agreements with four artists: Kurupt, The Spooks, Baby
S and El-Drex. These provide for initial terms of twelve months, with additional
twelve-month options exercisable by Antra. The Recording Agreement provides that
during the term of the agreements, Antra owns all right, title and interest in
all musical recordings recorded under the agreements. Antra's rights under these
agreements will survive even after they terminate. Under these agreements, Antra
also has the right to use and publish each artist's name and likeness in
connection with video and commercial purposes. According to the agreements, the
artist receives a royalty for sales of recording albums and singles in line with
industry norms, which typically range from five to ten percent.
Exclusive Production Recording Agreements
Antra currently has exclusive production recording agreements with Kurupt.
Kurupt has agreed to provide Antra with his exclusive personal services as a
phonograph-recording artist for a period of twelve (12) months. Antra has the
option to extend the contract by additional one-year options, subject to certain
terms and conditions. Antra is required by the agreement to seek agreements with
third-party record companies who will manufacture and distribute the artist's
recordings. Antra has the right to select the producer and musical composition
for any albums produced by the artist under the recording agreement. Antra also
has the exclusive right to the artist's name and likeness and owns all right,
title and interest in all recordings produced under the agreement.
Relationship with Artists
Our plan is to sign and develop new or emerging urban or hip-hop oriented
music artists and, to the extent practicable, sign established artists. We
intend to recruit new and emerging artists and to enter into exclusive,
long-term recording contracts (expected to cover an initial album, with options
to record four to seven additional albums, at Antra's discretion). Antra will
concentrate its resources on a small number of artists, developing a tailored
marketing and promotion plan for each. There can be no assurance that Antra will
be able to attract new and emerging music talent or established artists, or, if
Antra is able to attract such talent, that Antra will be able to develop that
talent successfully or in such a manner so as to commercially exploit.
If Antra develops commercially successful music artists, there can be no
assurance that Antra will be able to maintain its relationships with such
artists even if it has entered into exclusive recording contracts with them.
Furthermore, performing artists occasionally request releases form their
exclusive recording agreements. Among the reasons that may cause an artist to
engage in so-called "label jumping" are expectations of greater income, advances
or promotional support by a competing label. There can be no assurance that any
given
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artist developed by Antra will not determine to request a release form his or
her agreement with Antra. Because of the highly personal and creative nature of
the artist's contractual obligations to Antra, it is not feasible to force an
unwilling artist to perform the terms of his or her contract with Antra.
Copyrights
Antra's recorded music business, like that of other companies involved in
recorded music, will primarily rest on ownership and or control and exploitation
of musical works and sound recordings. Antra's music products, including its
commercial music, are and will be protected under applicable domestic and
international copyright laws.
Although circumstances vary from case to case, rights and royalties
relating to a particular recording typically operate as follows: When a
recording is made, copyright in that recording vests either in the recording
artist (and is licensed to the record company) or in the record company itself,
depending on the terms of the agreement between them. Similarly, when a musical
composition is written, copyright in the composition vests either in the writer
(and is licensed to a music publishing company) or in a publishing company. A
public performance of a record will result in money being paid to the writer and
publisher. The rights to reproduce songs on sound carriers results in mechanical
royalties being payable by the record company to the recording artists for the
use of the recording. Antra operates in an industry which revenues are adversely
affected by the unauthorized reproduction of recordings for commercial sale,
commonly referred to as "piracy", and by home taping for personal use.
Potential publishing revenues may be derived from Antra's ownership
interest in musical compositions, written in whole or in part by artists.
Management anticipates securing an ownership position in the copyright to any
compositions written by its recording artists, where such rights are available
and have not been previously sold or assigned. Generally, revenues from
publishing are generated in the form of: (1) mechanical royalties, paid by the
record company to the publisher for the mechanical duplication of the copyright
to a particular composition (as distinct from the copying of the artist's
performance of that composition); (2) performance royalties, collected and paid
by performing rights entities such as ASCAP and BMI for the actual public
performance of the composition as represented by radio airplay, Musak, or as a
theme or jingle broadcast in synchronization with a visual image via television;
(3) sub-publishing revenues derived from copyright earnings in foreign
territories, and publishers in those territories acting as designated collection
agents for Antra; and (4) licensing fees derived from printed sheet music, uses
in synchronization with images as in video or film scores, computer games and
other software applications, and any other use involving the composition.
Competition
Antra will face intense competition for discretionary consumer spending
from numerous other record companies and other forms of entertainment offered by
film companies, video companies and others. Antra will compete directly with
other recorded music companies, including the major recorded music companies,
which distribute contemporary music, as well as with other record companies for
signing artists and acquiring music catalogs. Many of these competitors have
significantly longer operating histories, greater financial resources and larger
music catalogs than Antra. Antra's ability to compete successfully in the
recorded music business will be largely dependent upon its ability to sign and
retain artists who will prove to be successful and to introduce music products
which are accepted by consumers.
Employees/Independent Contractors
As of November 1, 1999, Antra had six employees, all of whom were located
at our Philadelphia offices. None of our employees is represented by a labor
union. We have not experienced any work stoppage and considers relations with
our employees to be good.
As is customary in the music business, Antra also utilizes the services of
artists, performers, producers, engineers, roadies, booking agents and others
who are independent contractors. These independent contractors
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hire out their services on an as needed basis and receive a set fee from Antra
per assignment. Independent contractors are utilized because the individuals
providing these services do so only on this basis, the services performed by
these independent contractors are less expensive than having full time employees
perform these services.
Properties
Antra's executive offices are located at 1515 Locust Street, Philadelphia,
Pennsylvania 19102, where it subleases approximately 10,400 square feet. This
sublease expires on September 30, 2003. The annual base rental for this space is
approximately $104,000.
Dividends
We have not paid any dividends on our common stock since the formation of
our company and we do not expect to pay any cash or other dividends in the
foreseeable future. If we have any earnings in the future from our operations,
we plan to retain those earnings to help finance our future operations and
growth. Any decision on the future payment of dividends is solely at the
discretion of the board of directors and will depend on various factors
including the results of our operations and our financial condition.
Legal Proceedings
Antra and some of its stockholders are defendants in a legal action.
Plaintiffs allege that Antra or the stockholders failed to convey 100,000 shares
of Antra's common stock. However, the transaction alleged involves only the
plaintiffs and those stockholders. The complaint does not allege that Antra
participated in the transaction in any way. Although it was shares of Antra that
were involved in the alleged transaction, Plaintiffs do not allege that Antra
itself was a party to the transaction. Therefore, Antra believes that it was
incorrectly named as a party to this lawsuit and denies any liability.
However, Antra's motion to dismiss the action was denied by the court. If
the outcome of this case is unfavorable, Antra's exposure would depend on the
price of its stock. Assuming $5 per share is the price of the stock, the
liability could be approximately $500,000. If treble damages were to be awarded,
Antra's exposure could be approximately $1,500,000.
Organizational History
Antra Music was formed in 1997 as a New Jersey corporation named Wall
Street Records, Inc. On April 24, 1998, it changed its name to Antra Music.
Antra Holdings was formerly known as Opell, Inc. Opell was formed as a Utah
corporation on October 7, 1981 with the name "Summit Race Horse, Inc." In
January 1995, it merged with Opell, Inc., a Nevada corporation, solely to change
its domicile to Nevada. Opell had no operations or substantial assets until it
acquired all the outstanding shares of Antra Music in June 1997. In January
1998, Opell was reincorporated in Delaware by merger into its wholly owned
subsidiary, Wall Street Records, Inc., a Delaware corporation. In April 1998,
Wall Street Records, Inc. changed its name to Antra Holdings.
SELLING SECURITY HOLDERS
The shares of common stock being registered for the account of selling
security holders may be sold by those security holders or their transferees
commencing on the date of this prospectus. These shares may only be sold if the
holder of a convertible note first converts it into shares or a holder of a
warrant first exercises it to purchase shares.
The following table sets forth, as of November 17, 1999, certain
information with respect to the beneficial ownership of our common stock by each
selling security holder. The table assumes that all of the shares being offered
will be sold. Because the selling security holders may sell all, some or none of
the shares that he, she or it holds, the actual number of shares held by the
selling security holder before or after this offering may vary.
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The selling security holders may have sold, transferred or otherwise
disposed of all or a portion of their convertible notes and warrants in
transactions exempt from the registration requirements of the Securities Act. If
this is the case and Antra has not been informed, the information below may not
be up-to-date. If necessary, additional information concerning the selling
security holders will be set forth in prospectus supplements.
The column under the heading "Before the Offering -- Shares Beneficially
Owned" includes all shares currently outstanding, shares issuable upon
conversion of convertible notes currently outstanding and shares issuable upon
exercise of warrants currently outstanding. It does not include shares issuable
upon conversion of additional convertible notes or exercise of additional
warrants that may be issued after the effectiveness of our registration
statement. Under specific conditions after the effectiveness of the registration
statement, Antra can compel some holders of outstanding convertible notes and
warrants to purchase a specified number of additional convertible notes and
warrants. The noteholders and warrantholders currently do not have the right to
purchase the shares issuable upon conversion or exercise of these additional
convertible notes and warrants. Unless the required conditions are met and Antra
chooses to compel these noteholders and warrantholders to purchase the
additional convertible notes and warrants, these noteholders and warrantholders
will not acquire this right within 60 days of the date of this prospectus.
The column labeled "Shares Offered" includes all of the shares from the
"Before the Offering" columns plus the additional shares described in the
immediately preceding paragraph. Accordingly, the number of shares in the column
labeled "Shares Offered" may exceed the number of shares in the column entitled
"Before the Offering -- Shares Beneficially Owned."
Furthermore, the number of shares in the columns entitled "Before the
Offering -- Shares Beneficially Owned"and "Shares Offered" reflect the maximum
number of shares Antra is required to register under its agreement with the
holders of the convertible notes and warrants. Depending on the price of Antra's
common stock at the time of conversion, the actual number of shares that Antra
will issue to holders of convertible notes is expected to be lower than as
reflected in these columns.
<TABLE>
<CAPTION>
Before the Offering After the Offering
--------------------- -----------------------------
Shares Shares Percent of
Identity of Stockholder or Beneficially Shares Beneficially Shares
Group (and relationship, if any) Owned Offered Owned Outstanding
- ------------------------------- --------------------- ----------- -------------- ------------
<S> <C> <C> <C> <C>
Austost Anstalt Schaan ................... 1,482,530 1,725,000 0 0
Balmore Funds S.A. ....................... 1,482,530 1,725,000 0 0
Berkeley Group Ltd. ...................... 257,831 300,000 0 0
Castlebay Ltd. ........................... 400,000 400,000 0 0
Coastal Provinces Ltd. ................... 407,240 407,240 0 0
Craighouse Limited ....................... 192,760 192,760 0 0
Ellis Enterprises, Ltd. .................. 64,979 78,674 0 0
Nesher, Inc. ............................. 171,887 200,000 0 0
United Securities Services, Inc. ......... 128,916 150,000 0 0
Libra Finance S.A. ....................... 1,518,555 1,978,554 0 0
Hyett Capital Ltd. ....................... 132,048 112,049 0 0
Talbiya B. Investments Ltd. .............. 194,056 160,723 0 0
</TABLE>
- ------------
* Less than one percent.
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PLAN OF DISTRIBUTION
Sales of shares of the common stock may be made from time to time by the
selling security holders, or, subject to applicable law, by pledgees, donees,
distributees, transferees or other successors in interest. These sales may be
made on the over-the-counter market or foreign securities exchanges, in
privately negotiated transactions or otherwise or in a combination of
transactions at prices and at terms then prevailing or at prices related to the
then current market price, or at privately negotiated prices. In addition, any
shares covered by this prospectus which qualify for sale pursuant to Section
4(1) of the Securities Act or Rule 144 under the Securities Act may be sold
under those provisions rather than by this prospectus. Without limiting the
generality of the foregoing, the shares may be sold in one or more of the
following types of transactions:
o a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
o an exchange distribution in accordance with the rules of such exchange;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; and
o face-to-face transactions between sellers and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the
selling security holders may arrange for other brokers or dealers to
participate in the resales.
In connection with distributions of the shares or otherwise, the selling
security holders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares registered under this prospectus in the course of hedging the
positions they assume with the selling security holders. The selling security
holders may also sell shares short and deliver the shares to close out such
short positions. The selling security holders may also enter into option or
other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares registered under this prospectus, which the
broker-dealer may resell by this prospectus. The selling security holders may
also pledge the shares registered hereunder to a broker or dealer and upon a
default, the broker or dealer may effect sales of the pledged shares by this
prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling security holders in
amounts to be negotiated in connection with the sale. These brokers or dealers
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales and any such commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act.
Information as to whether underwriters who may be selected by the selling
security holders, or any other broker-dealer, is acting as principal or agent
for the selling security holders, the compensation to be received by
underwriters who may be selected by the selling security holders, or any
broker-dealer, acting as principal or agent for the selling security holders and
the compensation to be received by other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and customary
commissions, will, to the extent required, be set forth in a supplement to this
prospectus. Any dealer or broker participating in any distribution of the shares
may be required to deliver a copy of this prospectus, including a prospectus
supplement, if any, to any person who purchases any of the shares from or
through such dealer or broker.
Each of the selling security holders have executed an agreement in which
they confirm the method of distribution described in this section and agree not
to sell the shares if the registration statement is not current.
Antra Holdings has advised the selling security holders that if at any time
they may be engaged in a distribution of the shares, they are required to comply
with Regulation M under the Exchange Act. The selling security holders have
acknowledged such advice by separate agreement and also agreed in that agreement
to comply with the regulation. In general, Regulation M precludes the selling
security holders, any affiliated purchasers and any broker-dealer or other
person who participates in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is the
subject of the
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distribution until the entire distribution is complete. A "distribution" is
defined in the rules as an offering of securities that is distinguished from
ordinary trading activities and depends on the "magnitude of the offering and
the presence of special selling efforts and selling methods." Regulation M also
prohibits any bids or purchases made in order to stabilize the price of a
security in connection with the distribution of that security.
It is anticipated that the selling security holders will offer all of the
shares for sale. Further, because it is possible that a significant number of
shares could be sold at the same time hereunder, such sales, or the possibility
thereof, may have a depressive effect on the market price of the common stock.
MANAGEMENT
The following are the officers and directors of Antra Holdings:
Name Age Position
---- --- --------
Chairman of the Board,
Joseph M. Marrone, Jr. ......... 34 Chief Executive Officer and Director
Thomas R. Kessler .............. 61 Director
Arthur G. Rosenberg ............ 61 Director
Joseph M. Marrone, Jr. formed Antra Music in 1997 and now devotes
substantially all of his time to Antra's business. He has been engaging in
private law practice in the Philadelphia area since 1993, although his practice
is no longer accepting new matters. He previously served as a City Solicitor for
the City of Philadelphia and worked as a campaign strategist for the current
Mayor, Ed Rendell, in the 1991 election. Mr. Marrone successfully negotiated the
release of Kurupt from his previous contract and has since managed Kurupt's
career. He has been a director of Antra Holdings since 1997.
Thomas R. Kessler has extensive experience in the banking and securities
businesses. From 1961 to 1993, Mr. Kessler held various positions at Euro
Canadian Bank, Continental Bank International, and Compass Bank & Trust Company
Ltd,. Since 1994, he has been a managing director of Montaque Securities
International Limited. Mr. Kessler received his law degree from Cleveland
Marshall College of Law, Cleveland State University. He has been a director of
Antra Holdings since 1998.
Arthur G. Rosenberg has been a principal of The Associated Companies, a
real estate development firm, since 1987 and became a principal of Millinnium
Development Group LLC in 1998. Prior to that, Mr. Rosenberg was a practicing
lawyer in Huntington, New York and served as general counsel for ITT Levitt &
Sons, Inc., an international builder. Mr. Rosenberg currently serves on the
boards of directors of Mike's Original, Inc. and Phar Mor Inc. He has been a
director of Antra Holdings since 1997.
Directors are elected to serve until the next annual meeting of
stockholders of Antra Holdings or until their successors are elected and
qualified. There are no audit, compensation or other committees of the board of
directors.
Executive Compensation
The following table sets forth information concerning compensation paid or
accrued by Antra Holdings or its subsidiaries for services rendered during
fiscal years 1998 and 1997 to our chief executive officer. No other executive
officer's compensation exceeded $100,000 during either of these fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Name and Principal Position Year Salary
- ---------------------------- ------ -----------
<S> <C> <C>
Joseph M. Marrone, Jr., Chairman and Chief Executive Officer .......... 1998 $130,769
1997 $ 0
</TABLE>
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Employment Agreement
Antra Holdings entered into an employment agreement with Joseph M. Marrone
on March 12, 1998. The agreement expires on March 29, 2001, which will be
automatically renewed annually unless terminated by either party. Mr. Marrone is
required by the agreement to oversee, develop, produce and manage music products
for Antra Music and to participate and oversee all entertainment projects of
Antra Music. Mr. Marrone agreed to act as an executive of Antra Music and Antra
Holdings and to provide services to other affiliates of ours.
Mr. Marrone's base salary for the first year of his employment agreement is
$200,000. He may be awarded an increase in base salary or a bonus, in either
case solely at the discretion of the board of directors based upon a review of
Antra's performance in the prior year. He is also entitled to all benefits
generally offered to Antra's other executives, if any, and to an automobile
allowance. Since November 1998, all of Mr. Marrone's salary payments and
accruals ceased with his consent.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the date of this
prospectus regarding the ownership of Antra Holdings's common stock by: each
person we know owns 5% or more of our outstanding shares; each of our directors;
and all officers and directors of Antra Holdings as a group. Each owner of the
common stock has sole voting and investment power for all shares listed below,
except as otherwise indicated.
Some of the selling security holders could, in extreme circumstances, own
in excess of 5.00% of Antra's common stock prior to the offering. However, these
security holders have agreed that their ownership interest of Antra's equity
will be at all times less than 5.00% and that they will not exercise or convert
their warrants or convertible notes to the extent that their equity ownership
would exceed that limit. Because of their agreements, these security holders are
not included in the table below.
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Ownership of Class
- -------------- ----- --------- --------
<S> <C> <C> <C>
Common Stock, par value Joseph M. Marrone, Jr. 1,900,000 16.46%
$.001 per share Antra Holdings Group, Inc.
1515 Locust Street
Philadelphia, Pennsylvania 19102
Teltran International Group, Ltd. 2,000,000 17.32%
One Penn Plaza, Suite 4632
New York, New York 10119
All directors and officers 1,900,000 16.46%
as a group (4 persons)
</TABLE>
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DESCRIPTION OF SECURITIES
Antra Holdings is currently authorized to issue 50,000,000 shares of common
stock, $.001 par value and 5,000,000 shares of preferred stock, par value $.001
per share.
Common Stock
Each share of common stock entitles the holder thereof to one vote on all
matters submitted to a vote of the stockholders. Since the holders of common
stock do not have cumulative voting rights, holders of more than 50% of the
outstanding shares can elect all of the directors of Antra Holdings and holders
of the remaining shares by themselves cannot elect any directors. The holders of
common stock do not have preemptive rights or rights to convert their common
stock into other securities. In the event of a liquidation, dissolution or
winding up of Antra Holdings, holders of the common stock have the right to a
ratable portion of the assets remaining after payment of liabilities. All of the
outstanding shares of common stock are duly authorized, validly issued, fully
paid and non-assessable.
The holders of shares of common stock are entitled to dividends when and as
declared by the board of directors from funds legally available therefor. Antra
Holdings has never declared or paid cash dividends on its common stock. Antra
Holdings intends to retain its net income, if any, to increase its capital base
and, accordingly, does not currently anticipate paying cash dividends.
Preferred Stock
Antra Holdings's certificate of incorporation authorizes the issuance of
"blank check" preferred stock with whatever designation, rights and preferences
as may be determined by the board of directors. Accordingly, the board is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could adversely affect the
voting power or other rights of the holders of common stock. The preferred stock
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of Antra. Although we do not
currently intend to issue any shares of preferred stock, there can be no
assurance that we will not do so.
Secured Convertible Notes
The secured convertible notes bear interest at 10% per annum. The secured
convertible notes mature on July 20, 2002, unless accelerated to any date after
July 20, 2000 at the option of the holder of the note. Under limited conditions
and at limited times, Antra Holdings may redeem the secured convertible notes.
The secured convertible notes are convertible into shares of our common
stock. The conversion price is equal to 50% of the average of the closing bid
prices for shares of our common stock over the preceding 5 trading days, but is
limited to $3.25 per share. For example, if a note holder elects to convert
$500,000 of notes into shares and the average closing bid price of our common
stock is $6.25, the converting holder will receive 160,000 shares.
Subordinated Convertible Notes
The currently outstanding subordinated convertible notes bear interest at
10% per annum and mature on January 15, 2002. The subordinated convertible notes
may be prepaid, in whole or in part, at any time without penalty. The
subordinated convertible notes are convertible into shares of our common stock
at the same conversion price as the secured convertible notes described in the
previous section.
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CERTAIN TRANSACTIONS
Teltran
In April 1999, Antra Holdings and Teltran International Group Ltd.
exchanged shares of our respective companies. We thus now own 2,205,000 shares
of Teltran's common stock and Teltran owns 2,000,000 shares of our common stock.
As a result of the transaction Teltran may be deemed a principal stockholder of
Antra Holdings. Teltran is a publicly traded company engaged in the
telecommunications business.
We made the exchange because we intended to enter into ventures with
Teltran and because we thought that their stock was of comparable value. To
protect each party, there will be an adjustment in the number of shares owned by
an entity if there is a disparity in the relative market value of the two
entities. On the first business day of the year 2000, if either Teltran's shares
or our shares are trading less than 20% below the market price of the other
company's shares, the company whose shares are trading lower must issue
additional shares to the other.
Antra Holdings and Teltran formed a corporation, Recordstogo.com. We will
have equal interest with Teltran in this joint venture corporation, although we
will grant a minority interest to a supplier. We expect it to begin operations
in Winter 1999.
Secured Convertible Notes
On July 20, 1999, Antra sold $2,766,666 of secured convertible notes.
As security for our obligations under the notes, we deposited 1,000,000 of
our Teltran shares with a collateral agent.
Antra Holdings paid an aggregate of $343,999 as cash commissions to several
placement agents in connection with the issuance of the notes. Some of these
placement agents also received warrants to purchase an aggregate of 1,146,666
shares of our common stock at $2.00 per share. If we exercise the Put Option,
these placement agents will receive $172,000 in cash and an additional 573,334
warrants.
Antra Holdings agreed to file a registration statement on Form SB-2 with
the Securities and Exchange Commission by September 18, 1999 to register the
shares that can be acquired by the conversion of the notes and the exercise of
the warrants.
For two weeks following the effectiveness of the registration statement
filed in connection with this prospectus, Antra Holdings has the option to
require all of the holders of secured convertible notes to purchase up to
$1,383,334 of additional notes (the "Put Option"). We can only exercise this
option if the trading volume of our common stock is more than 75,000 shares per
day on each of the ten previous trading days. You should be aware that the daily
trading volume of our common stock has exceeded 75,000 shares only twice between
since July 1998 and July 1999. Nevertheless, in November 1999, Antra and the
holders of the secured convertible notes agreed to accelerate a portion of the
Put Option. As a result, we received gross proceeds of $800,000 andissued
secured convertible notes in the same principal amount. Antra paid $108,800 in
fees and expenses, including $96,000 as cash commissions. Antra also issued to
some of the placement agents warrants to purchase an aggregate of 720,000 shares
of Antra's common stock at $2.00 per share. 400,000 of these warrants were
issued as consideration for the partial acceleration of the Put Option.
The conversion price of the notes and the exercise price of the warrants
were determined in arm's-length negotiations between representatives of Antra
Holdings and the investors. These prices are not based on Antra Holdings's net
worth or any other established valuation criteria.
Refinancing of Subordinated Convertible Notes
On July 31, 1999, Antra refinanced $1,000,000 of its outstanding
subordinated convertible notes. In addition to the features of the subordinated
convertible notes described above in "Description of Securities," these notes
also have registration rights similar to those of the secured convertible notes.
Therefore, the registration statement filed in connection with this prospectus
also covers the shares that can be acquired by the conversion of the
subordinated convertible notes.
LEGAL MATTERS
Certain legal matters in connection with the shares of common stock being
offered hereby will be passed upon for Antra Holdings by Parker Duryee Rosoff &
Haft, P.C., New York, New York.
21
<PAGE>
EXPERTS
The financial statements included in this prospectus have been audited by
Liebman Goldberg & Drogin LLP, Garden City, New York, independent certified
public accountants, as indicated in their report.
ADDITIONAL INFORMATION ABOUT ANTRA HOLDINGS
Antra Holdings has filed with the Securities and Exchange Commission
("SEC") a Registration Statement on Form SB-2 with respect to the common stock
being offered. Antra Holdings has also filed with the SEC a Form 10-SB. In the
future, Antra Holdings will file with the SEC our annual, quarterly and special
reports, proxy statements and other information that the SEC requires.
This prospectus is only part of the registration statement and does not
contain all of the information included in the registration statement. Whenever
a reference is made in this prospectus to any contract or other document , the
reference may not be complete and you should refer to the exhibits that are a
part of the registration statement for a copy of the contract or document.
You may read and copy any of the information on file with the SEC at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549
You may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. Filed documents are also available to the
public at the SEC's website at http://www.sec.gov.
22
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONTENTS
<TABLE>
<CAPTION>
Page #
------------
<S> <C>
Auditors' Report ......................................................................... F-2
Consolidated Financial Statements:
Consolidated Balance Sheets at December 31, 1998 and 1997 ................................ F-3
Consolidated Statements of Operations for the years ended December 31, 1998 and 1997 .... F-4
Consolidated Statements of Stockholders' Deficit for the years ended December 31, 1998
and 1997 .............................................................................. F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1998 and 1997 .... F-6
Notes to Consolidated Financial Statements .............................................. F-7 -- F-10
Consolidated Financial Statements:
Consolidated Balance Sheets at September 30, 1999 and 1998 .............................. F-11
Consolidated Statements of Operations for the nine months ended September 30,
1999 and 1998 .......................................................................... F-12
Consolidated Statements of Cash Flows for the nine months ended September 30, 1999 and
1998 ................................................................................... F-13
Notes to Consolidated Financial Statements .............................................. F-14
</TABLE>
F-1
<PAGE>
LIEBMAN GOLDBERG & DROGIN LLP [Letterhead]
The Board of Directors
Antra Holdings Group, Inc.
We have audited the accompanying consolidated balance sheets of Antra Holdings
Group, Inc. as of December 31, 1998 and 1997, and the related consolidated
statements of operations and stockholders' deficit, and cash flows for the years
then ended. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Antra Holdings
Group, Inc. (formerly Opell, Inc.) as of December 31, 1998 and 1997 and the
results of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency, which raise substantial doubt about its
ability to continue as a going concern. Management's plans regarding those
matters also are described in Notes 7 and 8. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
May 26, 1999
Garden City, New York
F-2
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
-------------------------------
1998 1997
--------------- -------------
<S> <C> <C>
Assets
Current Assets:
Cash in bank .............................................. $ 13,121 $ 16,576
Prepaid expenses .......................................... 22,377 65,632
------------ ----------
Total current assets .................................... 35,498 82,208
Property and Equipment, Net ................................ 67,777 37,048
Other Assets:
Security deposits ......................................... 13,024 2,670
Other ..................................................... 987 987
Goodwill .................................................. 5,000 5,000
------------ ----------
Total assets ............................................ $ 122,286 $ 127,913
============ ==========
Liabilities and Stockholders' Deficit
Current Liabilities:
Accrued expenses payable .................................. $ 109,633 $ --
Payroll taxes payable ..................................... 895 894
------------ ----------
Total current liabilities ............................... 110,528 894
------------ ----------
Long-Term Liabilities:
Loan payable .............................................. 388,505 575,000
Loan payable -- subordinated .............................. 807,240 --
Officer loan payable ...................................... 21,334 22,333
------------ ----------
Total long-term liabilities ............................. 1,217,079 597,333
------------ ----------
Total liabilities ....................................... 1,327,607 598,227
------------ ----------
Commitments and Contingencies
Stockholders' Deficit:
Common stock, par value $.001; 50,000,000 shares authorized
9,544,210 and 7,824,210 shares issued and outstanding,
respectively ............................................ 9,544 7,824
Additional paid in capital ................................ 989,656 131,276
Deficit ................................................... (2,204,521) (609,414)
------------ ----------
Total stockholders' deficit ............................. (1,205,321) (470,314)
------------ ----------
Total liabilities and stockholders' deficit ............. $ 122,286 $ 127,913
============ ==========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
Income:
Show income .......................................... $ 20,000 $ --
------------ -----------
Expenses:
Recording and production expenses .................... 476,199 190,060
Studio expenses ...................................... 14,163 27,317
Bodyguards ........................................... 32,750 --
Publicity and promotion .............................. 342,302 41,732
Contributions ........................................ 16,320 --
Professional fees .................................... 246,210 114,228
Consulting expenses .................................. 159,765 89,850
Salaries ............................................. 331,239 11,575
Payroll taxes ........................................ 24,055 1,216
Rent ................................................. 29,623 5,917
Auto expenses ........................................ 208,279 26,764
Insurance expense .................................... 40,530 --
Travel and entertainment ............................. 298,728 24,472
Telephone ............................................ 53,423 20,164
Office ............................................... 49,329 15,797
Miscellaneous expenses ............................... 32,040 7,263
Registration expense ................................. 18,950 --
Repairs and maintenance .............................. 2,143 8,352
Dues and subscriptions ............................... 434 3,187
Postage and delivery ................................. 24,608 3,305
Depreciation expense ................................. 10,939 1,170
Reimbursed overhead .................................. (996,922) --
------------ -----------
Total expenses ..................................... 1,415,107 592,369
------------ -----------
Net operating loss .................................... (1,395,107) (592,369)
Other (income) expense:
Loss on investment in Joint Venture .................. 200,000 --
------------ -----------
Net loss for the year ................................. $ (1,595,107) $ (592,369)
============ ===========
Net loss per share of common stock based upon 9,268,030
and 2,130,593 weighted average shares, respectively
(Basic and Diluted) ................................... $ (0.17) $ (0.28)
============ ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
For the years ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Additional Total
Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
------------ -------- ------------ --------------- ----------------
<S> <C> <C> <C> <C> <C>
Balance -- January 1, 1997 .................. 324,210 $ 324 $ 17,776 $ (17,045) $ 1,055
June 1, 1997 Reverse Acquisition ............ 5,000,000 5,000 -- -- 5,000
Shares purchased ............................ 2,500,000 2,500 113,500 -- 116,000
Net loss for the year ....................... -- -- -- (592,369) (592,369)
--------- ------ -------- ------------ ------------
Balance -- December 31, 1997 ................ 7,824,210 7,824 131,276 (609,414) (470,314)
Shares issued as repayment of loans ......... 1,720,000 1,720 858,380 -- 860,100
Net loss for the year ....................... -- -- -- (1,595,107) (1,595,107)
--------- ------ -------- ------------ ------------
Balance -- December 31, 1998 ................ 9,544,210 $9,544 $989,656 $ (2,204,521) $ (1,205,321)
========= ====== ======== ============ ============
</TABLE>
See notes to financial statements.
F-5
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended December 31,
---------------------------------
1998 1997
---------------- --------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss ................................................ $ (1,595,107) $ (592,369)
------------ ----------
Adjustments to Reconcile Net Loss to Net Cash (Used in)
Operating Activities:
Depreciation .......................................... 10,939 1,170
Changes in Assets and Liabilities:
Decrease (Increase) in prepaid expenses .............. 43,255 (65,632)
(Increase) in other assets ........................... (10,354) (11,657)
Increase in accrued expenses ......................... 109,633 --
Increase in payroll taxes payable .................... 1 894
------------ ----------
Total adjustments ................................. 153,474 (75,225)
------------ ----------
Net cash (used in) operating activities ........... (1,441,633) (667,594)
------------ ----------
Cash Flows from Investing Activities:
Acquisition of property and equipment ................. (41,668) (38,218)
------------ ----------
Cash Flows from Financing Activities:
Borrowings from stockholders' and related parties
(net of repayment) ................................... 1,479,846 597,333
Capital contributions ................................. -- 124,000
------------ ----------
Net cash provided by financing activities ......... 1,479,846 721,333
------------ ----------
Net (decrease) increase in cash .......................... (3,455) 15,521
Cash -- beginning of year ................................ 16,576 1,055
------------ ----------
Cash -- end of year ...................................... $ 13,121 $ 16,576
============ ==========
Non-cash Investing and Financing Activities:
Non-cash issuance of common stock for notes
payable .............................................. $ 860,100 --
============ ==========
Supplemental Disclosures:
Income tax ............................................ $ -- $ --
============ ==========
Interest paid ......................................... $ -- $ --
============ ==========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
Note 1 -- Operations:
Opell, Inc., now known as Antra Holdings Group, Inc. ("the Company"), was
formed as a Nevada Corporation and through June 1997 was not engaged in any
business activity and had nominal assets. On June 10, 1997, the Company acquired
all the shares of Wall Street Records, Inc. a New Jersey Corporation ("the
Subsidiary"). The Subsidiary was formed on March 20, 1997 to engage in various
aspects of the music business, including the production and distribution of
recorded music. In connection with the acquisition of the Subsidiary, the
Company issued 5,000,000 shares of its Common Stock to stockholders of the
Subsidiary, who then owned a majority of the outstanding shares of the Company.
The acquisition was treated as a purchase and as a reverse acquisition so that
the historical financials of the Subsidiary represent the financials of the
Company. Subsequent to December 31, 1998, the Company reincorporated in Delaware
and in April 1998, the Company changed its name to Antra Holdings Group, Inc.
and the Subsidiary changed its name to Antra Music Group, Inc. The Subsidiary's
activities, consisted of negotiating agreements and arrangements with artists,
and thereby incurred substantial expenses. In April 1998, the Subsidiary and A &
M Records formed an LLC (Limited Liability Corporation) (the "Joint Venture")
for the purpose of promoting, recording and distributing records or videos of
certain of the Subsidiary's recording artists. The Joint Venture released its
first recording in October 1998. Revenues were recognized in 1998. All expenses,
incurred in 1998, were written off as incurred, since the Company's recording
artist had no history of producing profitable albums, and in such circumstances,
the recording industry anticipates marginal success for albums. Expenses for
production and distribution of the record album were incurred by the corporation
as well as the joint venture. Subsequent to 1998, as discussed in Notes 7 and 8,
the joint venture was terminated. As part of the joint venture termination, A &
M Records agreed to return the Company's original investment, refund production
costs on an unaccounted for basis and in 1999 pay an additional $725,000 (see
note 8).
Note 2 -- Summary of Significant Accounting Policies:
Principles of Consolidation:
The consolidated financial statements include the accounts of the company
and its wholly-owned subsidiary. Intercompany balances and transactions have
been eliminated.
Revenue Recognition
The Company produces, licenses and distributes recorded music. It
recognizes revenues as follows:
Production and Distribution -- As a producer and distributor, the Company
will recognize revenue upon the sale of a completed album. Also upon completion
of an album, the Company will recognize any costs recoverable from the artist.
During 1998, all completed record sales were part of the joint venture agreement
with A & M Records, and upon termination of that venture, unallocated costs
(overhead) were applied against operating costs.
License Agreements -- Revenues will be recognized when the licensor signs a
noncancelable contract, agrees to a fixed fee, delivers the rights and meets all
significant obligations to furnish a record or music.
Property and Equipment:
Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets, which range from five to seven
years. Leasehold improvements are amortized over the shorter of the lease term
or the useful life of the asset.
F-7
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1998
Note 2 -- Summary of Significant Accounting Policies: -- (Continued)
Development Stage Activities and Operations:
Prior to October 1998, the Company was a development stage activity. Since
the Company now has continuing business revenues, financial information does not
include losses accumulated during the development stage period not part of the
financial statement period.
Ability to continue as a Going Concern
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which contemplates
continuation of the company as a going concern. The Company, as shown in the
accompanying consolidated financial statements, has a deficit of $2,204,521 at
December 31, 1998 and incurred a loss of $1,595,107 during the year ended
December 31, 1998.
The Company has relied upon debt and equity funding from stockholders and
other sources since inception. Additional equity is planned to be raised by
private-placement sales of common stock to new and existing stockholders in
order to fund operations until the Company is consistently profitable. While
management believes that such funding will be available, the adequacy of such
funding, if any, is uncertain. Management has not determined the amount of
funding necessary to support its sales at current levels or the amounts needed
for increased sales. This uncertainty, combined with the Company's recurring
losses, raises substantial doubt about the entity's ability to continue as a
going concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Loan Payable -- Subordinated:
As of December 31, 1998 the Company received loans from Millport Limited
amounting to $1,195,745. Of this amount, the Company has agreed to subordinate
$807,240 to Coastal Provinces Ltd., a company managed by Millport Limited.
Income Taxes:
At December 31, 1998, the Company has an operating loss carryforward of
approximately $2,200,000 after limitations based on changes in ownership.
Loss Per Common Share:
Basic loss per share was computed by dividing the company's net loss by the
weighted average number of common shares outstanding during the period. There is
no presentation of diluted loss per share as the effect of common stock options,
warrants and convertible debt amounts are antidilutive. The weighted average
number of common shares used to calculate loss per common share during 1998 was
9,268,030 shares.
The Company adopted Financial Accounting Standards Board (FASB) Statement
No. 128, "Earnings per Share". The Statement establishes standards for computing
and presenting earnings per share (EPS). It replaced the presentation of primary
EPS with a presentation of basic EPS and also requires dual presentation of
basic and diluted EPS on the face of the income statement. The Statement was
applied to the 1998 loss per share but did not have any effect.
In 1998, the Company issued 1,250,000 shares and 470,260 shares
respectively of common stock as repayment of $860,100 loans previously
received.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those amounts.
F-8
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1998
Note 2 -- Summary of Significant Accounting Policies: -- (Continued)
Fair Value of Financial Instruments:
SFAS No. 107, "Disclosures About Fair Value of Financial Instruments",
requires disclosure of the fair value information, whether or not recognized in
the balance sheet, where it is practicable to estimate that value. The carrying
value of cash, cash equivalents and accounts receivable approximates fair value.
Impairment of Long-Lived Assets:
The Company has not completed it's evaluation of the adoption of SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of." However, management believes any such effect will not be
material.
Accounting Pronouncements:
The Financial Accounting Standards Board ("FASB") issued SFAS No. 130,
"Reporting Comprehensive Income", which is effective for financial statements
with fiscal years beginning after December 15, 1997. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. The Company does not
expect adoption of SFAS No. 130 to have a material effect, if any, on its
financial position or results of operations.
The FASB issued SFAS 131, "Disclosure about Segments of an Enterprise and
Related Information", issued by FASB, which is effective for financial
statements with fiscal years beginning after December 31, 1998. This statement
establishes standards for the way that public entities report selected
information about operating segments, products, and services, geographic areas,
and major customers in interim and annual financial reports. The Company does
not expect adoption of SFAS No. 131 to have a material effect, if any, on its
financial position or results of operations.
Note 3 -- Prepaid Recording Costs:
In accordance with FASB Statement No. 50, "Financial Reporting in the
Record and Music Industry", advances to artists and producers are capitalized as
an asset when the current popularity and past performance of the artist or
producer provides a sound basis for estimating the probable future recoupment of
such advances from earnings otherwise payable to the artist or producer. Any
portion of such advances not deemed to be recoupable from future royalties is
reserved at the balance sheet date. All other significant advances which do not
meet the above criteria are fully reserved when paid.
The Company in anticipation of completion of record production makes
various advances and payments on behalf of the recording artist. These payments
are prepaid and will be expensed when the record production is completed and the
record issued.
Note 4 -- Loan Payable:
During the period July 15, 1997 to December 31, 1998, the Company received
various loans totaling $2,055,845. Additionally, in 1998, 1,720,000 shares of
common stock were issued as repayment of $860,100 of these loans. The fair
market value of $.50 per share was based upon the non-liquidity and thin market
of Antra's stock.
The president of the company has made various loans to the Company
amounting to $21,334. At the present time, there is no repayment schedule.
Note 5 -- Stockholders' Deficit:
The Company has 50,000,000 shares of common stock, par value $.001
authorized. During the year, the Company issued 1,720,000 shares of common
stock to various investors.
F-9
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
December 31, 1998
Note 6 -- Commitments and Contingencies:
The Company and certain stockholders are defendants in a legal action,
whereby plaintiffs allege the failure of the Company or those stockholders to
convey 100,000 shares of the Company's common stock. Attorneys for the Company
filed a motion to dismiss the action on behalf of the Company. Should there be
an unfavorable decision, the Company's liability at a current stock market value
of $5 per share could be between $500,000 and $1,500,000 (assuming treble
damages). The Company denies any liability and does not expect this action to
have any significant impact on the results of operations, liquidity or financial
condition.
The Company subleases office space expiring September 30, 2003. The annual
rental commitments are as follows:
1999 .................................... $ 75,429
2000 .................................... 107,942
2001 .................................... 120,947
2002 .................................... 127,449
2003 .................................... 101,439
--------
$533,206
========
Note 7 -- Investment in Joint Venture:
On March 13, 1998, the Company formed Wall St. Records, LLC, a Delaware
limited liability corporation. The Company contributed $200,000 of capital in
accordance with the limited liability company agreement.
In April 1998, the Subsidiary and A & M Records formed an LLC (Limited
Liability Corporation) (the "Joint Venture") for the purpose of promoting,
recording and distributing records or videos of certain of the Subsidiary's
recording artists. The Joint Venture released its first recording in October
1998. Revenues were recognized in 1998. All expenses, incurred in 1998, were
written off as incurred, since the company's recording artist had no history of
producing profitable albums, and in such circumstances, the recording industry
anticipates marginal success for albums.
As of December 31, 1998, the Company has realized a loss on its investment
in the joint venture of $200,000, representing its entire investment.
Note 8 -- Subsequent Events:
On April 7, 1999, the Company agreed to terminate the joint venture
agreement with A & M Records in exchange for the future rights to the artists
that were assigned to the LLC, release of all liability and debt incurred by the
LLC and payment of $725,000. The Company has released all claims to any revenue
or profits of the LLC that may arise from the release of recording of the
artists while assigned to the LLC.
F-10
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
September 30,
Assets
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
-------------- ---------------
<S> <C> <C>
Current Assets:
Cash in bank ............................................ $ 591,960 $ 66,263
Investment in Joint Venture ............................. -- 200,000
Investment .............................................. 6,000,000 --
Deferred financing costs ................................ 125,666 --
Prepaid recording costs ................................. 1,072,031 268,969
------------ ------------
Total Current Assets .................................. 7,789,657 535,232
Property and Equipment, Net .............................. 113,961 66,814
Other Assets:
Security deposits ....................................... 14,943 13,221
Deferred financing costs ................................ 226,889 --
Investment in Joint Venture ............................. 150,000 --
Other ................................................... 987 987
Goodwill ................................................ 5,000 5,000
------------ ------------
Total assets .......................................... $ 8,301,437 $ 621,254
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Convertible debentures payable .......................... $ 2,766,666 $ --
Accrued expenses payable ................................ 87,824 --
Payroll taxes payable ................................... 3,139 5,906
------------ ------------
Total current liabilities ............................. 2,857,629 5,906
------------ ------------
Long-Term Liabilities:
Loan payable .......................................... 5,514 722,270
Loan payable -- subordinated .......................... 1,000,000 --
Officer loan payable .................................. 11,344 21,334
------------ ------------
Total long-term liabilities .......................... 1,016,858 743,604
------------ ------------
Total liabilities .................................... 3,874,487 749,510
------------ ------------
Commitments and Contingencies ............................
Stockholders' Equity:
Common stock, par value $.001; 50,000,000 shares
authorized, 11,544,210 and 9,544,210 shares issued and
outstanding, respectively ............................ 11,544 9,544
Additional paid in capital ............................ 6,987,656 989,656
Accumulated Deficit ................................... (2,572,250) (1,127,456)
------------ ------------
Total stockholders' equity ........................... 4,426,950 (128,256)
------------ ------------
Total liabilities and stockholders' equity ........... $ 8,301,437 $ 621,254
============ ============
</TABLE>
F-11
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the nine months ended September 30,
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Income:
Show fees ................................................. $ 10,044 $ --
Royalties ................................................. 46,076 --
------------ -----------
56,120 --
------------ -----------
Expenses:
Recording and production expenses ......................... 337,292 91,694
Studio expenses ........................................... 3,022 12,698
Publicity and promotion ................................... 33,892 184,833
Professional fees ......................................... 173,180 172,645
Consulting expenses ....................................... 46,125 134,565
Salaries .................................................. 87,329 239,656
Payroll taxes ............................................. 10,174 19,408
Rent ...................................................... 72,468 9,515
Equipment lease ........................................... 24,091 --
Auto expenses ............................................. 26,201 167,213
Travel and entertainment .................................. 96,836 196,945
Telephone ................................................. 41,082 33,781
Office .................................................... 7,066 37,864
Miscellaneous expenses .................................... 10,558 19,283
Insurance expense ......................................... 58,970 26,542
Interest expense .......................................... 79,035 --
Repairs and maintenance ................................... 12,470 1,918
Dues and subscriptions .................................... 1,747 434
Postage and delivery ...................................... 10,484 17,209
Depreciation expense ...................................... 15,574 7,904
Registration Expense ...................................... 11,193 17,450
Reimbursed overhead ....................................... -- (873,515)
------------ -----------
Total expenses ........................................... 1,158,789 518,042
------------ -----------
Net loss from operations ..................................... (1,102,669) (518,042)
Other Income:
Interest Income ............................................. 9,940 --
Settlement of Joint Venture ................................. 725,000 --
------------ -----------
Net (loss ) .................................................. $ (367,729) $ (518,042)
============ ===========
Net (loss) per share of common stock based upon 11,544,210 and
9,174,871 weighted average shares ........................... $ (0.03) $ (0.06)
============ ===========
</TABLE>
F-12
<PAGE>
ANTRA HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30,
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
--------------- ---------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) ............................................... $ (367,729) $ (518,042)
------------ -----------
Adjustments to Reconcile Net (loss) to Net Cash (Used in)
Operating Activities:
Depreciation ............................................ 15,574 7,904
Changes in Assets and Liabilities:
(Increase) in prepaid expenses .......................... (1,049,654) (203,337)
(Increase) in deferred financing costs .................. (125,666) --
(Increase) in investment in Joint Venture ............... -- (200,000)
(Increase) in other assets .............................. (228,808) (10,551)
(Decrease) in accrued expenses payable .................. (21,809) --
Increase in payroll taxes payable ....................... 2,244 5,012
------------ -----------
Total adjustments ..................................... (1,408,119) (400,972)
------------ -----------
Net cash (used in) operating activities ............... (1,775,848) (919,014)
------------ -----------
Cash Flows from Investing Activities:
Acquisition of property and equipment ................... (61,758) (37,670)
------------ -----------
Investment in Joint Venture ............................. (150,000) --
------------ -----------
Net Cash (used in) Investing Activities .............. (211,758) (37,670)
------------ -----------
Cash Flows from Financing Activities:
Borrowings (Repayments) from/to stockholders' and related
parties ............................................... (200,221) 146,271
Increase in debentures payable .......................... 2,766,666 --
Capital Contributions ................................... -- 860,100
------------ -----------
Net cash provided by financing activities ............. 2,566,445 1,006,371
------------ -----------
Net increase in cash ..................................... 578,839 49,687
Cash -- January 1. ....................................... 13,121 16,576
------------ -----------
Cash -- September 30, .................................... $ 591,960 $ 66,263
============ ===========
</TABLE>
F-13
<PAGE>
ANTRA HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1999
Note 1 -- Basis of Presentation:
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the nine month period ended September 30,
1999 are not necessarily indicative of the results to be expected for the full
year.
Note 2 -- Material Events:
During the nine months ended September 30, 1999, the following events
occurred:
On April 7, 1999 the Company agreed to terminate the joint venture
agreement with A & M Records in exchange for the future rights to the artists
that were assigned to the LLC, release of all liability and debt incurred by the
LLC and payment of $725,000. The Company has released all claims to any revenue
or profits of the LLC that may arise from the release of recordings of the
artists while assigned to the LLC.
On July 20, 1999 the Company sold $2,766,666 of secured convertible notes,
receiving $2,422,667 in net proceeds after commissions and other expenses of the
sale. As security for these obligations under the notes, Antra deposited
1,000,000 of our Teltran shares with a collateral agent.
On July 26, 1999 Antra invested $150,000 as their initial investment in a
joint venture with Teltran International Group, Ltd. The joint venture, known as
Recordstogo.com, will be utilized as a vehicle to sell records belonging to an
unaffiliated third party. Revenues will be generated from numerous sources that
are part of the joint venture website. These include hard to find records,
memorabilia, old record albums, music download in MP3 and other formats, etc.
On July 31, 1999, Antra refinanced $1,000,000 of its outstanding
subordinated convertible notes. These notes also have registration rights
similar to those of the secured convertible notes. Therefore, the registration
statement filed in connection with this prospectus also covers the shares that
can be acquired by the conversion of the subordinated convertible notes.
The Company no longer has a stockholders' deficit due to the settlement of
the joint venture and financing arrangements previously discussed. While the
Company continues to operate at a loss and cannot determine future funding
requirements, it does anticipate future revenues to reduce operating losses.
These revenues are expected to come from Recordstogo.com and Antra record sales.
However, there still is substantial doubt about the entity's ability to continue
as a going concern.
F-14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Articles Sixth and Seventh of the Certificate of Incorporation of the
Company provides with respect to the indemnification of directors and officers
that the Company shall indemnify to the fullest extent permitted by Sections
102(b)(7) and 145 of the Delaware General Corporation Law, as amended from time
to time, each person that such Sections grant the Company the power to
indemnify. Article Seventh of the Certificate of Incorporation of the Company
also provides that no director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transaction from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the liability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by Section 102(b)(7) of Delaware General Corporation Law, as
amended from time to time.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth various expenses, other than underwriting
discounts, which will be incurred in connection with this offering. Other than
the SEC registration fee amounts set forth below are estimates:
SEC registration fee .....................................$11,611.71
Blue sky legal fees ...................................... 0
Printing and engraving expenses. ......................... 10,000
Legal fees ............................................... 40,000
Accounting fees. ......................................... 10,000
Miscellaneous expenses ................................... 2,500
----------
$74,111.71
==========
Item 26. Recent Sales of Unregistered Securities
The following sets forth information relating to all unregistered
securities of the Company sold by it in the last 3 years. There were no
reportable transactions prior to June 1997.
On June 10, 1997, Opell, Inc. ("Opell"), a Nevada corporation, issued
5,000,000 shares to the stockholders of Wall Street Records, Inc. ("Wall
Street"), a New Jersey corporation, in exchange for all of the outstanding
capital stock of Wall Street. Opell subsequently merged with a subsidiary
corporation formed in Delaware and the surviving entity changed its name to
Antra Holdings Group, Inc. The former holders of Wall Street were directors,
officers and promoters of Wall Street and their families, so the Company
believes the transaction is exempt from the registration requirements pursuant
to Section 4(2) of the Securities Act. Because Opell had an accumulated
stockholders' deficit at the time of the transaction, the shares issued to the
holders of Wall Street were valued at their par value ($.001 per share), or
$5,000 in the aggregate.
On July 11, 1997, the Company issued 2,500,000 shares to various investors
in a private placement transaction in accordance with Regulation 504 of the
Securities Act of 1933 for $100,000.
Between January 9, 1998 and March 3, 1998, the Company issued 1,720,260
shares to various investors in a private placement transaction in accordance
with Regulation 504 of the Securities Act of 1933 for $860,130.
On October 2, 1998, the Company issued a Subordinated Convertible Note in
exchange for existing indebtedness in the amount of $807,240. The note was
issued to a single, accredited investor. Therefore, the Company believes the
issuance of such note is exempt from the registration requirements pursuant to
Section 4(2) of the Securities Act.
II-1
<PAGE>
In November 1998, the Company issued an additional Subordinated Convertible
Note in exchange for existing indebtedness in the amount of $192,760. The note
was issued to a single, accredited investor. Therefore, the Company believes the
issuance of such note is exempt from the registration requirements pursuant to
Section 4(2) of the Securities Act.
In April 1999, the Company and Teltran International Group Ltd. exchanged
shares of our respective companies. Teltran is a publicly traded company engaged
in the telecommunications business. The Company believes that the transaction is
exempt from the registration requirements pursuant to Section 4(2) of the
Securities Act. The Company now owns 2,205,000 shares of Teltran's common stock
and Teltran owns 2,000,000 shares of the Company's common stock. As a result of
the transaction Teltran may be deemed a principal stockholder of the Company.
The share exchange was made at a time when each company's market capitalization
was roughly equivalent. To protect each company from market fluctuations in the
other's stock, the parties entered into an agreement that requires an adjustment
in the shares delivered in connection with the exchange described above. On the
first business day of the year 2000, if either Teltran's shares or the Company's
shares are trading less than 20% below the market price of the other company's
shares, the company whose shares are trading lower must issue additional shares
to the other.
On July 20, 1999, the Company sold $2,766,666 of secured convertible notes.
All of the investors were accredited investors and the transaction is exempt
from the registration requirements under the Securities Act pursuant to Rule
506. The Company paid an aggregate of $343,999 as cash commissions to several
placement agents in connection with the issuance of the notes. Some of these
placement agents also received warrants to purchase an aggregate of 1,146,666
shares of our common stock at $2.00 per share. If the Company is able to
exercise a put option granted in connection with the foregoing transaction,
these placement agents will receive an additional $172,000 in cash and an
additional 573,334 warrants in a transaction exempt pursuant to Rule 506.
On July 31, 1999, the Company issued new notes to the holders of its
outstanding subordinated convertible notes. Because the new notes were issued to
accredited investors who already owned securities of the Company, the Company
believes that the transaction is exempt from the registration requirements
pursuant to Section 4(2) of the Securities Act.
Item 27. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Certificate of Incorporation*
3.2 By-laws*
5.1 Opinion of Parker Duryee Rosoff & Haft***
10.1 Employment Agreement between Joseph M. Marrone, Jr. and Registrant*
10.2 Distribution Agreement between Sheridan Square Entertainment, L.L.C. d/b/a Artemis Records
and the Registrant*
10.3 Form of Subscription Agreement for Secured Convertible Notes and Common Stock Purchase
Warrants*
10.4 Form of Secured Convertible Notes*
10.5 Form of Common Stock Purchase Warrants*
10.6 Form of Security Agreement*
10.7 Stockholders' Agreement dated as of September 30, 1999 among Teltran International Group, Ltd.,
Antra Group Holdings, Inc., and Recordstogo.com Inc.**
10.8 Exclusive Recording Agreement between Wall Street Records LLC and Ricardo Emanuel Brown (p/k/a
"Kurupt"), dated as of March 13, 1998.**
10.9 Exclusive Production/Recording Agreement between Wall Steet Records LLC and Grant Eldridge
(p/k/a "El-Drex"), dated as of March 17, 1997.**
10.10 Co-Publishing Agreement between Wall Street Records LLC and Grant Eldridge (p/k/a "El-Drex")**
10.11 Agreement between Wall Street Records LLC and David Ware (p/k/a "Baby S"), dated as of August
19, 1998**
10.12 Label Agreement between Antra Music Group, Inc. and Legal Grind Entertainment, Inc., dated
as of October 28, 1999**
10.13 Co-Publishing Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a "Crush"),
dated as of October 1, 1999**
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.14 Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a "Crush"), dates as of
October 1, 1999**
10.15 Agreement between Antra Music Group, Inc. and five individuals collectively professionally
known as "Spooks", dated as of July 1, 1999**
21.1 Subsidiary List**
23.1 Consent of Liebman, Goldberg & Drogin LLP**
23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1 hereto)
24 Power of Attorney (included in the Signature page of Part II of this Registration Statement)
27 Financial Data Schedule***
</TABLE>
- ------------
* Submitted with the original filing of this SB-2 on September 17, 1999.
** Submitted herewith.
*** To be submitted.
Item 28. Undertakings
Registrant hereby undertakes:
(1) That for purposes of determining any liability under the Securities
Act, the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(2) That for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(b) To reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(4) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
Registrant pursuant to Item 24 of this Part II to the Registration Statement, or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a director, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against the public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933,
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of
Philadelphia, State of Pennsylvania, on the 19th day of November 1999.
ANTRA HOLDINGS GROUP, INC.
By: /s/ Joseph M. Marrone, Jr.
---------------------------------------
Chairman of the Board, Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints JOSEPH M. MARRONE, JR., his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/Joseph M. Marrone, Jr. Chairman of the Board, Chief November 19, 1999
- --------------------------------- Executive Officer, Director
Joseph M. Marrone, Jr. (Principal Executive Officer)
/s/Thomas R. Kessler Director November 19, 1999
- ---------------------------------
Thomas R. Kessler
/s/Arthur Rosenberg Director November 19, 1999
- ---------------------------------
Arthur Rosenberg
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
3.1 Certificate of Incorporation*
3.2 By-laws*
5.1 Opinion of Parker Duryee Rosoff & Haft***
10.1 Employment Agreement between Joseph M. Marrone, Jr. and Registrant*
10.2 Distribution Agreement between Sheridan Square Entertainment, L.L.C. d/b/a Artemis
Records and the Registrant*
10.3 Form of Subscription Agreement for Secured Convertible Notes and Common Stock
Purchase Warrants*
10.4 Form of Secured Convertible Notes*
10.5 Form of Common Stock Purchase Warrants*
10.6 Form of Security Agreement*
10.7 Stockholders' Agreement dated as of September 30, 1999 among Teltran International Group, Ltd.,
Antra Group Holdings, Inc., and Recordstogo.com Inc.**
10.8 Exclusive Recording Agreement between Wall Street Records LLC and Ricardo Emanuel Brown (p/k/a
"Kurupt"), dated as of March 13, 1998.**
10.9 Exclusive Production/Recording Agreement between Wall Steet Records LLC and Grant Eldridge
(p/k/a "El-Drex"), dated as of March 17, 1997.**
10.10 Co-Publishing Agreement between Wall Street Records LLC and Grant Eldridge (p/k/a "El-Drex")**
10.11 Agreement between Wall Street Records LLC and David Ware (p/k/a "Baby S"), dated as of August
19, 1998**
10.12 Label Agreement between Antra Music Group, Inc. and Legal Grind Entertainment, Inc., dated
as of October 28, 1999**
10.13 Co-Publishing Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a "Crush"),
dated as of October 1, 1999**
10.14 Agreement between Antra Music Group, Inc. and Jeffrey Brown (p/k/a "Crush"), dates as of
October 1, 1999**
10.15 Agreement between Antra Music Group, Inc. and five individuals collectively professionally
known as "Spooks", dated as of July 1, 1999**
21.1 Subsidiary List**
23.1 Consent of Liebman, Goldberg & Drogin LLP**
23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1 hereto)
24 Power of Attorney (included in the Signature page of Part II of this Registration Statement)
27 Financial Data Schedule***
</TABLE>
- ------------
* Submitted with the original filing of this SB-2 on September 17, 1999.
** Submitted herewith.
*** To be submitted.
<PAGE>
RECORDStogo.com, Inc.
STOCKHOLDERS' AGREEMENT
AGREEMENT, dated as of September 30, 1999, by and among TELTRAN
INTERNATIONAL GROUP, LTD. ("Teltran"), a Delaware corporation with its principal
address at One Penn Plaza, Suite 4632, New York, New York 10119, ANTRA GROUP
HOLDINGS, INC., a Delaware corporation with its principal address at 1515 Locust
Street, Philadelphia, Pennsylvania 19102 ("Antra"), and RECORDSTOGO.COM, Inc., a
Delaware corporation with its principal address at One Penn Plaza, Suite 4632,
New York, New York 10119 (the "Corporation"). Teltran and Antra may each be
referred to herein as a "Stockholder" and sometimes collectively referred to
herein as the "Stockholders."
INTRODUCTION
Teltran is in the telecommunications business and has created a web
portal, and Antra is in the urban music business. The Corporation was formed on
July 29, 1999 to serve as the corporate vehicle for a joint venture between the
two Stockholders to sell various music and other entertainment products on the
Internet. The authorized capital stock of the Corporation consists of 50,000,000
shares of common stock, $.001 par value per share (the "Common Shares"), and
5,000,000 shares of preferred stock, $.001 par value per share (the "Preferred
Shares"; and with the Common Shares, sometimes collectively referred to herein
as the "Shares"). Teltran and Antra each own fifty (50%) percent of the
outstanding Common Shares. There are no Preferred Shares currently outstanding.
The Stockholders believe that in order to promote their mutual
interests and the interests of the Corporation, it is advisable to set forth
herein certain understandings with respect to the future disposition of any
Shares and the management of the business and affairs of the Corporation.
Accordingly, in consideration of the foregoing and of the mutual
promises and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
1. Management and Internal Affairs.
1.1 Contributions and Contributions of Services Capital by
Stockholders.
1.1.1 Initial Capital Contributions. As of the date of the
execution and delivery of this Agreement, the parties have agreed to
each contribute $255,000 to the Corporation as an initial capital
contribution ("Initial Capital Contribution"), of which $12,500 will
constitute payment for the Shares owned by each of them and will be
paid in cash. In addition, as of the date
<PAGE>
hereof, Teltran and Antra have each contributed the sum of $2,500 to
the Corporation in the form of payment of the legal fee advance
required in order to form and properly organize the Corporation. The
Initial Capital Contribution of each Stockholder, minus the $12,500
cash payment for the Shares and the $2,500 already contributed to the
Corporation in the form of payment of the legal advance, shall be paid
in the form of a three-year promissory note made by each of them
(together, the "Stockholder Notes") in the name of the Corporation,
which Stockholder Notes shall each be in substantially the form to be
agreed upon and to be annexed hereto as Exhibit A.
1.1.2 Budget and Plan of Operations. Not less often than
annually, the Board (as such term is defined in subsection 1.2.1 below)
shall cause to be prepared and shall approve a budget (the "Budget")
for the Corporation, which sets forth the estimated receipts and
expenditures of the Corporation for the period covered thereby, and a
plan of operations (the "Plan") for the Corporation, which sets forth
the projected business goals and methods of achieving such goals of the
Corporation for the period covered thereby. The Board (as such term is
defined in subsection 1.2.1 below) shall meet periodically to discuss
the results of the business operations of the Corporation and to
evaluate the Plan and the Budget, and may, as it deems in the best
interest of the Corporation, update a Budget during a year as
frequently as it wishes, in light of its evaluations of the business
operations and Plan of the Corporation for such year. Concurrently with
the execution and delivery of this Agreement, the Board (as such term
is defined in subsection 1.2.1 below) has approved an initial Budget
and Plan for the Corporation. Upon approval of a Budget (including any
update thereof) and Plan for the Corporation, the officers of the
Corporation shall adhere to the Plan and the Budget and are only
authorized to expend funds and incur liabilities on behalf of the
Corporation as therein set forth.
1.1.3 Additional Advances. The Stockholders shall make
additional advances to or on behalf of the Corporation as required by
the Budget. Additional advances shall be made equally by each of them.
1.1.4 No Other Capital Contributions. Except as set forth in
subsection 1.1.3 above, the Stockholders shall not be obligated to make
any additional capital contributions to the Corporation.
1.2 Board of Directors.
1.2.1 The number of directors constituting the entire Board of
Directors of the Corporation (the "Board") shall be two (2). Each
Stockholder agrees during the term of this Agreement, to nominate and
to vote their respective shares for one nominee designated by Teltran
and one nominee designated by Antra. The initial designee of each
Stockholder is as set forth on Schedule A annexed hereto.
1.2.2 The Stockholders may change any or all of their
respective designees from time to time by notice to the other
Stockholders, and the Stockholders agree to vote to elect or
2
<PAGE>
appoint such new designees as Directors as set forth in such notice. In
the event that any designee shall fail to continue to serve as a
Director, the Stockholder appointing such designee shall have the right
to designate a replacement for such Director, and the Stockholders
agree to vote to elect or appoint such designee as a Director.
1.2.3 The right to designate Directors for election to the
Board, shall remain in place for as long as the so empowered
Stockholders remain Stockholders of the Company. Upon the cessation for
any reason of a Stockholder's authority to designate a Director, those
seats on the Board formerly controlled by such Stockholder shall be
filled by election of the Stockholders without restriction in
accordance with the relevant terms of the General Corporation Law of
the State of Delaware.
1.3 Quorum and Voting Requirements of the Board of Directors.
1.3.1 The presence in person or telephonically of all of the
Directors shall be required for any meeting of the Board. The unanimous
vote or written consent of all of the Directors shall be required for
any action taken by the Board.
1.3.2 Actions taken by written consent shall have the same
effect as actions voted on at meetings of the Board of Directors.
1.4 Officers. The Stockholders agree to use their best efforts to
secure the election and continuation in office at the person set forth in
Schedule 1.4.
1.5 No Prohibition Against Other Business Ventures. Except as
prohibited by the provisions of subsection 7.2 hereof, the Stockholders, as well
as any persons or entities which own and/or control a Stockholder, may engage
and hold interests in other business ventures of every kind and description for
their own account. Neither the Corporation nor any of the Stockholders shall
have any rights in or to such business ventures by virtue of the Stockholder (or
a person owning or controlling such Stockholder) engaging in such venture being
a Stockholder (or owning or controlling a Stockholder) of the Corporation.
1.6 Responsibilities of the Stockholders. The Stockholders have each
agreed to supply the Corporation with the following items or services. Except as
expressly set forth in this subsection 1.6 and in subsection 1.1.3, a
Stockholder shall have no other financial responsibility, liability or
obligation to the Corporation.
1.6.1 Responsibilities of Teltran. Teltran, through its
representatives will provide the Corporation with the services set
forth in Schedules 1.6.1.
1.6.2 Responsibilities of Antra. Antra, through its
representatives will provide the Corporation with services set forth in
Schedules 1.6.2.
3
<PAGE>
1.6.3 Reimbursement by the Corporation. The parties
acknowledge that the services to be provided to the Corporation by both
of the Teltran Representative and the Antra Representative shall be an
expense of the Corporation and the respective party shall be reimbursed
therefor by the Corporation.
1.7 Default by a Stockholder. In the event that a Stockholder defaults
in the performance of any of its obligations contained in subsection 1.1.3 or
1.6 hereof (as the case may be), the non-defaulting Stockholder shall have the
right to give the defaulting Stockholder a notice specifically setting forth the
nature of such default and stating that the defaulting Stockholder shall have
twenty (20) days within which to cure such default. If the default is not cured
within such time, the non-defaulting Stockholder and the Corporation shall each
have the following rights, options and remedies which shall be cumulative and
may be exercised concurrently or independently in the sole and absolute
discretion of the non-defaulting Stockholder:
1.7.1 The right to bring an action at law by or on behalf of
the Corporation or the non-defaulting Stockholder in order to recover
the amounts owed, if any, and any incidental or consequential damages
arising from such default (including, without limitation, reasonable
attorneys' fees and disbursements incurred by the Corporation or the
non-defaulting Stockholder, as the case may be, in prosecuting any such
action).
1.7.2 The non-defaulting Stockholder may advance any amount
owed to the Corporation by the defaulting Stockholder. Such amount
shall bear interest at the rate of interest provided for in the
Stockholder Notes and shall be a joint and several obligation of the
defaulting Stockholder and the Corporation. In addition, all
distributions from the Corporation that would otherwise be made to the
defaulting Stockholder (whether before or after liquidation of the
Corporation) shall, instead, be paid to the non-defaulting Stockholder,
or retained by the Corporation to the extent it made any payments to
the non-defaulting Stockholder, until such amount and all interest
accrued thereon has been repaid in full.
1.7.3 For purposes of voting or giving any consents or
approvals under any provisions of this Agreement, the right to deny the
defaulting Stockholder any of its voting, consent or approval rights
under this Agreement.
1.7.4 The option to purchase all of the Shares of the
defaulting Stockholder shall be at purchase price and pursuant to terms
set forth in Schedules 1.74.
2. General Transfer Restrictions.
2.1 Prohibition of Transfers. Neither Stockholder shall sell, assign,
pledge, hypothecate or otherwise alienate, encumber or otherwise dispose of, in
any manner, whether or not for consideration (hereinafter referred to as a
"Transfer"), any of the Shares, except as expressly permitted by the terms of
this Agreement. Any attempted issue or Transfer of Shares or other
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securities of the Corporation in violation of this Agreement shall not be
recognized and shall be deemed void ab initio. The foregoing provisions shall
not, however, apply to any sale by a Stockholder in connection with the sale of
all such Stockholder's assets to an entity or person not a party to this
Agreement or to a wholly owned subsidiary of such Stockholder, provided such
purchasing party agrees in writing to be bound by the terms and conditions
hereof.
2.2 General Conditions Upon Waiver of Prohibition. In addition to and
not in limitation of any of the foregoing restrictions and conditions, but
except as otherwise herein provided, no Shares shall hereafter be issued or
transferred unless (i) such transaction is in compliance with all applicable
Federal and state securities laws as counsel of the Corporation shall determine,
and (ii) any certificate issued at any time representing any of the Shares shall
have an endorsement written, printed or stamped upon the face thereof which
reflects the foregoing and the fact that such Shares are subject to the terms,
conditions and restrictions of this Agreement.
3. Rights of First Refusal.
3.1 Right of First Refusal Generally. If at any time, or from time to
time, a Stockholder receives a bona fide offer from a person or entity not a
party to this Agreement (an "Offeror") to purchase all of its Shares (the "Third
Party Offer"), prior to the acceptance thereof, such Stockholder (the "Offering
Stockholder") shall give notice thereof to the other Stockholder in accordance
with the terms of this Section. Such notice (the "Offering Notice") shall
contain a copy of the Third Party Offer, including, but not limited to, the name
and address of the Offeror and the price at which and terms upon which such
Shares (the "Offered Shares") are proposed to be transferred. The Offering
Notice shall be deemed to be an offer by the Offering Stockholder to sell all
Offered Shares to the other Stockholders in accordance with the terms of the
Offering Notice and subject to the terms of this Agreement. The Stockholders
receiving the Offering Notice shall have the following options to accept such
offer:
3.1.1 The Offered Shares first shall be offered to the other
Stockholder, who shall have thirty (30) days in which to accept all or
any part of the Offered Shares at the purchase price and other terms
and conditions set forth in the Third Party Offer.
3.1.2 If any of the Offered Shares offered pursuant to the
foregoing offer are not accepted, the remaining Offered Shares shall be
offered to the Corporation, which shall have thirty (30) days in which
to accept any or any part of such Offered Shares at the purchase price
and other terms and conditions set forth in the Third Party Offer.
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3.1.3 All acceptances of Offered Shares shall be effected by
notice (the "Acceptance Notice") given to the Offering Stockholder
within the applicable time limits hereinabove specified.
3.1.4 If all of the Offered Shares are not accepted pursuant
to the foregoing clauses of this subsection 3.1 then all, but not less
than all, of the remaining Offered Shares may be transferred by the
Offering Stockholder, at any time within thirty (30) days after the
last Acceptance Notice was permitted to have been given, to the Offeror
named in the Offering Notice at the price and upon the other terms and
conditions set forth in the Offering Notice; provided, however, that
the Offering Stockholder is able to certify and certifies to the other
parties hereto that the transfer of the Offered Shares is to the
Offeror named in the Offering Notice and pursuant to the terms and
conditions set forth in the Offering Notice.
3.1.5 Irrespective of the provisions of this Agreement,
Teltran or Antra, at any time, may buy any or all or the Shares owned
by the other at such price and upon such terms as they may agree.
3.1.6 The offer made in any Offering Notice shall be deemed to
be a firm non-withdrawable offer for the applicable periods hereinabove
provided.
3.1.7 Except as otherwise expressly provided in this
Agreement, the closing, price and other terms and conditions of a
Transfer made pursuant to any of the provisions of this subsection 3.1
shall be as provided in Section 5 hereof.
3.1.8 The Offering Stockholder transferring all of its Shares
pursuant to this subsection 3.1 shall cause its designee to the Board
of Directors and any officers nominated thereby to tender his
resignation from all such positions simultaneously with the closing of
the transfer of its Shares, and the other parties hereto shall
forthwith do all acts necessary to modify all applicable documents
filed by the Corporation with various regulatory authorities.
3.1.9 During any period beginning on the giving of an Offering
Notice and ending upon the closing of the Transfer of any Shares
offered thereunder, such Shares shall not be voted and the holder
thereof shall not exercise any of the rights attendant to ownership
thereof.
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4. Bankruptcy of a Stockholder.
4.1 Affected Stockholder. Anything in this Agreement to the contrary
notwithstanding, if any Stockholder becomes bankrupt or its Shares become
subject to attachment (a "Triggering Event"), then neither such Stockholder (an
"Affected Stockholder") nor its trustee or transferee (a "Legal Substitute")
shall be entitled thereafter to be offered or to purchase any Shares pursuant to
any of the provisions of this Agreement, and such Stockholder's interests shall
be disregarded for all such purposes hereof; provided, however, that such
Stockholder or its Legal Substitute, in such an event, shall be bound, with
respect to such Shares, to all of the restrictions and obligations imposed under
this Agreement. Notice of the bankruptcy or attachment of the Affected
Stockholder (the "Triggering Event Notice") shall be given promptly after its
occurrence (which shall be within ten (10) days of any event constituting
bankruptcy) by the Affected Stockholder to the Corporation and to the other
Stockholder.
4.2 Call Privilege. Irrespective of the provisions of subsection 2.2
hereof, a Triggering Event Notice shall constitute the granting of an option to
purchase all of the Affected Stockholder's Shares (hereinafter referred to as a
"Call") at a purchase price determined in accordance with subsection 4.3 below,
which Call shall be available to and may be exercised by the other Stockholder
and/or the Corporation in the same proportions, order of priorities and manner,
within the same time limits and subject to the same general conditions as
provided for a right of first refusal in subsection 3.1 hereof, except that (i)
any or all of the Affected Shares may be purchased pursuant thereto, and (ii)
the terms "Affected Stockholder" and "Triggering Event Notice" shall be
substituted for the terms "Offering Stockholder" and "Offering Notice",
respectively, as used therein.
4.3 Valuation. If at any time a Stockholder is deemed to have offered
to sell its Shares pursuant to this Section 4 without having received a valid
Third Party Offer valuing the Shares, the initial purchase price of the Offered
Shares shall be the "Net Book Value" per Share. "Net Book Value" of a Share
shall mean the per share book value of the Corporation as of the last day of the
calendar month immediately preceding the date upon which the Corporation
receives notice of the bankruptcy or? of the Affected Stockholder, as determined
in accordance with generally accepted accounting principles applied on a basis
consistent with prior periods by the Corporation's regularly employed certified
public accountants.
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5. General Conditions to Purchase.
5.1 Corporate Repurchase. In the case of any repurchase of Shares
required to be made by the Corporation pursuant to any of the provisions hereof,
the Stockholders shall do all things (including, but not limited to, the casting
of their votes) appropriate and necessary to cause the Corporation to effect
such repurchase, but the Stockholders shall not be required to contribute
additional capital to the Corporation or lend it funds. In the event that the
Corporation's funds legally available for the repurchase of such Shares are
insufficient to pay the full purchase price due therefor, as and when it becomes
due (or at such sooner date as is required by applicable laws), and such
obligation is not assumed by the Stockholders under such terms as they shall
agree among themselves, then the Corporation and the Stockholders shall promptly
take all action necessary to reduce the stated capital of the Corporation to the
extent required to make funds available for said purpose; and if such funds
cannot be made available as a result thereof within the time specified, the,
within sixty (60) days thereafter, the Stockholders shall vote their Shares so
as to cause the immediate dissolution and liquidation of the Corporation and
shall take all other necessary action to promptly liquidate the Corporation
including the filing of an appropriate Certificate of Dissolution.
5.2 Closing and Payment.
5.2.1 Except as otherwise provided herein, the closing of any
purchase by the Corporation and/or a Stockholder pursuant to this
Agreement shall take place on the "Closing Date" at the offices of
Parker Duryee Rosoff & Haft, P.C., 529 Fifth Avenue, 8th Floor, New
York, New York, 10017. The Closing Date shall be the first business day
following the thirtieth calendar day after the last Acceptance Notice
is given.
5.2.2 At such closing, and except as otherwise provided
herein:
(i) The selling Stockholder (or his or its Legal
Substitute) shall deliver to the purchasing party certificates
representing the Shares to be purchased, duly endorsed, free and clear
of all liens, claims or encumbrances, with evidence of payment of all
transfer taxes and fees, if any.
(ii) The purchasing party shall deliver:
(A) A down-payment (by certified or bank cashier's
check) in an amount equal to (x) in the case of a sale pursuant to the
terms of subsection 3.1 hereof, the down-payment required by the terms
of the Third Party Offer; or (y) in the case of a sale pursuant to
Section 4 hereof, thirty (30%) percent of the purchase price determined
in accordance with subsection 4.3 hereof.
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(B) A promissory note, in negotiable form, in the
principal amount of the remainder of the price stated in the Offering
Notice or the purchase price determined in accordance with subsection
4.3 hereof, as the case may be, bearing interest at the prime rate per
annum in effect from time to time at a bank to be designated in New
York, New York, but in no event higher than the highest applicable rate
permitted by law. Such Note shall be payable in two equal six-month
installments of principal together with all interest accrued thereon to
the date of such payment, the first such payment to be due and payable
six (6) months following the Closing Date. Such Note shall be
collateralized by a pledge to the selling Stockholder or his or its
Legal Substitute of the purchased Shares and of the Shares held by the
purchasing Stockholder, or if the Corporation is the purchaser by a
lien on all of the assets of the Corporation.
(C) The Corporation and all Stockholders and their
Legal Substitutes shall do all things necessary and appropriate to
consummate such closing.
6. Books of Account.
Books and records of account of the Corporation shall be maintained at
its principal office, and true and accurate entries of all transactions had by
and on behalf of the Corporation shall be set down therein. Such books and
records, accounts and all other documents of the Corporation, at all times
during normal business hours, shall be open to the inspection of the
Stockholders and their authorized designees, who shall be entitled to make
copies therefrom and to take extracts thereof. Notwithstanding whether any of
the parties hereto remains a Stockholder, all such records and books of account,
together with all files and documents prepared on behalf of the Corporation,
shall remain in the exclusive possession of the Corporation.
7. Covenants of Stockholders.
7.1 Confidentiality. Each Stockholder agrees that it shall not, during
the term of this Agreement or at any time thereafter, use for its own benefit,
nor divulge, furnish or make accessible to anyone (otherwise than in the regular
course of the business of the Corporation) any confidential or secret knowledge
or information with respect to the business of the Corporation.
7.2 Non-Competition. Each Stockholder agrees that it shall not, while
it is a Stockholder, compete with the Corporation with respect to the sale of
music products on the Internet in any business then conducted or under
development by the Corporation, directly or indirectly, nor shall it be,
directly or indirectly, a partner or stockholder of any proprietorship,
partnership or corporation which so competes with the Corporation.
Notwithstanding the foregoing restrictions, the parties acknowledge that
Teltran, through its web portal, provides Internet access to entities who are
engaged in the business of Internet music sales and they hereby agree that such
activity does not and shall not constitute a breach of this subsection 7.2.
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7.3 Non-Solicitation. Each Stockholder agrees that, for so long as it
is a Stockholder of any of the Corporation and for a period of one (1) year
thereafter, it shall not directly or indirectly, (i) seek to persuade any
director, officer, employee or consultant of any of the Corporation to
discontinue that individual's status of employment by, or affiliation with, the
Corporation, (ii) solicit or hire, or cause to be solicited or hired, any such
officer, employee or consultant whether on its own behalf or on the behalf of
any third party; or (iii) solicit any client of the Corporation or solicit any
business which was being solicited by the Corporation or was under contract with
the Corporation during the period in which it was a Stockholder of the
Corporation.
7.4 Investment. Nothing in this Agreement shall preclude a Stockholder
from investing its corporate assets in securities of any corporation or other
business entity which is engaged in a business competitive with the Corporation,
if such securities are regularly traded on a national stock exchange or
over-the-counter and if such purchase shall not result in its holding
beneficially, at any time, more than two (2%) percent of the equity securities
of such competitor.
7.5 Equitable remedies. The parties hereto agree that the remedy at law
for any breach of this Section 7 shall be inadequate and that, in the event of
any such breach, the non-breaching parties shall be authorized and entitled to
obtain from any court of competent jurisdiction preliminary and permanent
injunctive relief, as well as an equitable accounting of all profits or benefits
arising from such breach, which rights and remedies shall be cumulative and in
addition to any other rights and remedies to which the non-breaching parties may
be entitled. The provisions of this subsection 7.5 shall be enforceable
notwithstanding the existence of any claim or cause of action of the breaching
party against any of the non-breaching parties, whether predicated on this
Agreement or otherwise.
8. Obligations of the Corporation; Conflict with By-Laws. The parties
hereto agree that all of the terms, covenants and conditions of this Agreement
shall supplement the By-Laws of the Corporation, and, in the event of conflict
therewith, shall prevail. The Corporation shall not be deemed a party to, nor be
directly obligated with respect to, any of the voting, consent or approval
provisions hereof; provided, however, that nothing in this Section 8 or
elsewhere set forth shall affect the rights and obligations of the Stockholders
among themselves under any of the provisions of this Agreement. Wherever in any
section of this Agreement reference is made to any action to be taken or not be
taken by the Corporation or otherwise or in accordance with specified
procedures, such reference shall be deemed to mean that the Stockholders shall
cast their votes and take such other action as reasonably may be necessary or
desirable or otherwise appropriate to cause the Corporation to take or not to
take such action or otherwise to effectuate such provisions and in accordance
with the procedures therein specified.
9. Binding Agreement; Assignment; Survival.
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Except to the extent otherwise expressly provided herein, this
Agreement shall be binding upon the present and future parties hereto, their
respective successors, assigns, heirs, legatees and Legal Substitutes and all
persons and other entities who otherwise may derive any rights or interests
hereunder from or through any of the parties hereto, regardless, in any event,
of whether any certificate representing shares of Common Stock bears the legend
provided for in subsection 2.3 hereof. Except to the extent otherwise expressly
provided herein, this Agreement shall inure to the benefit of the present and
future parties hereto, their respective heirs and legatees and, to the extent
that a transfer of their shares of Common Stock is effected pursuant to the
provisions of this Agreement, their assigns. All agreements, covenants,
representations, and warranties made herein shall survive the execution and
delivery of this Agreement and the agreements made pursuant hereto or referred
to herein.
10. Communications.
All notices, demands, requests, offers, approvals, consents,
acceptances, waivers, reports and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given,
received and dated when delivered personally or, if sent by overnight courier,
three days after being deposited with such courier addressed to the parties at
their addresses respectively set forth above or at such other address as any
party may give by notice. Any party may change its address by sending notice
thereof to the other parties in the manner prescribed above, except that notice
of change of address shall not be effective until actually received.
11. Construction; Headings; Word Meanings.
This Agreement, and all related agreements, instruments and documents,
shall be construed and enforced in accordance with the laws of the State of New
York without giving effect to the principles of conflict of laws. Headings and
titles are for convenience of reference only and shall not control the
construction or interpretation of any provision hereof.
12. Choice of Forum.
All disputes that may arise under this Agreement shall be submitted to
hearing in the Courts of the State of New York, County of New York and the
parties hereto irrevocable waive any defenses or claims as to improper
jurisdiction, inconvenient forum and improper venue with regard to such courts.
13. No Third Party Beneficiaries.
Nothing in this Agreement shall be construed as conferring upon any
person or other entity, other than the parties hereto and their Legal
Substitutes (to the extent provided herein), any right, remedy or claim under or
by reason of this Agreement.
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14. Entire Agreement; Modification; Consents; Waivers.
This Agreement and the agreements and instruments referred to herein
represent the entire agreement of the parties with respect to the subject matter
hereof and no interpretation, change, termination or waiver of or extension of
time for performance under, any provision of the Agreement shall be binding upon
any party unless in writing and signed by the party intended to be bound
thereby. Any provision of this Agreement can be modified if consented to by all
of the parties hereto. Receipt by any party of money or other consideration due
under this Agreement, with or without knowledge of breach, shall not constitute
a waiver of such breach or of any provision of this Agreement. Except as
otherwise provided herein, no waiver of or other failure to exercise any right
under, or default or extension of time for performance under, any of the
provisions of this Agreement shall affect the right of any party to exercise any
subsequent right under or otherwise enforce said provision or any other
provision hereof or to exercise any right or remedy in the event of any other
default, whether or not similar. Without limitation to the generality of the
foregoing and except as otherwise provided herein, the failure of any party to
exercise any right of first refusal or any Put or Call hereunder (hereinafter
collectively referred to as "said rights") shall not in any way constitute a
waiver of or otherwise affect such party's right to exercise any of the other
said rights or to exercise any subsequent said rights to which such party may
otherwise be entitled hereunder.
15. Severability.
The invalidity or unenforceability of any particular provision of this
Agreement shall not affect any of the other provisions hereof and this Agreement
shall be construed in all respects as if such invalid or unenforceable provision
were omitted.
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement of RECORDSTOGO.COM Inc. as of September 30, 1999.
TELTRAN INTERNATIONAL GROUP, LTD.
By: _____________________________________
Name:
Title:
ANTRA GROUP HOLDINGS, INC.
By: _____________________________________
Name:
Title:
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EXHIBIT A
Form of Stockholder Notes
[To Be Attached]
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SCHEDULE A
INITIAL DESIGNEES TO THE BOARD OF DIRECTORS
Teltran Designee - James E. Tubbs
Antra Designee - Joseph Marone
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WALL STREET RECORDS LLC
c/o A&M Records, Inc.
Worldwide Plaza
825 8th Avenue
New York, New York 10019
Dated: As of March 13,1998
Ricardo Emanuel Brown, Jr.
(professionally known as "Kurupt")
c/o Katz, Smith & Cohen
Ivy Place, Second Floor
3423 Piedmont Road, N.E.
Atlanta, GA 30305
Attention: Jeff Smith, Esq.
Dear Mr. Brown:
The following constitutes your and our agreement ("Contract"):
1. Services. During the term of this Contract ("Term") you
shall, in accordance with the provisions hereof, render to us your services and
furnish to us the services of one (1) or more producers for the purpose of
recording and delivering to us Masters.
2. Term.
(a) The Term shall consist of an "Initial Period" and of the
"Renewal Periods" for which we shall have exercised the options
hereafter provided. We shall have six (6) separate options, each to
extend the Term for a Renewal Period. The Initial Period and each
Renewal Period are each hereafter sometimes referred to generally as a
"Contract Period." Each Renewal Period is hereafter sometimes referred
to respectively in chronological order as the "First Renewal Period,"
"Second Renewal Period," "Third Renewal Period," "Fourth Renewal
Period," "Fifth Renewal Period," and "Sixth Renewal Period." We may
exercise each option to extend the Term for a Renewal Period by giving
you notice of our election to do so at any time prior to the
commencement of the Renewal Period for which our option is exercised;
(b) (i) The Initial Period shall commence on the date hereof
and shall continue until the date nine (9) months, or such
fewer number of days of which we may advise you in writing,
after the initial release in the United States, if any, of the
Album required to be delivered to us in
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fulfillment of your "Recording Commitment" (defined below)
hereunder for the Initial Period, which initial release, for
purposes of this subparagraph 2(b)(i) only, shall be deemed to
occur on the earlier of: (1) the date of the actual initial
release in the United States, if any, of that last Album; or
(2) the date that is one hundred twenty (120) days after your
delivery to us of that last Album. No days between November 15
and February 15 of the next calendar year shall be taken into
account for purposes of determining the duration or end of that
one hundred twenty (120) day period referred to in the
immediately preceding sentence; and
(ii) Each Renewal Period shall run consecutively, shall
commence upon the expiration of the immediately-preceding
Contract Period and shall continue until the date nine (9)
months, or such fewer number of days of which we may advise you
in writing, after the initial release in the United States, if
any, of the Album required to be delivered to us in fulfillment
of your Recording Commitment for that Renewal Period, which
initial release, for purposes of this subparagraph 2(b)(ii)
only, shall be deemed to occur on the earlier of: (1) the date
of the actual initial release in the United States, if any, of
that last Album; or (2) the date that is sixty (60) days after
your delivery to us of that last Album. No days between
November 15 and February 15 of the next calendar year shall be
taken into account for purposes of determining the duration or
end of that sixty (60) day period referred to in the
immediately preceding sentence; and
(c) Notwithstanding the foregoing, if as of the last date on
which we have the right to extend the Term for a Renewal Period
pursuant to subparagraph (b)(i) or (b)(ii) above, we have failed to
exercise our option to extend the Term for the next Renewal Period, the
then-current Contract Period nonetheless shall continue until you
notify us in writing of that failure, referring specifically to this
subparagraph 2(c). If we fail to exercise our option to extend the Term
for the next Renewal Period on or before the date that is thirty (30)
days after we receive that specific written notice from you, then the
Term shall end on the date that is thirty (30) days after we receive
that notice from you, as if that date were the original expiration date
of the Term, without any liability or additional obligation to you in
connection therewith.
3. Recording Commitment.
(a) Your "Recording Commitment" is as follows: During each
Contract Period, you shall record for and you shall deliver to us, at a
minimum, Masters sufficient to constitute one (1) LP, plus, at our
option, Masters sufficient to constitute one additional (1) Optional
LP; provided, however, that in the aggregate, without your prior
consent, you shall not have the obligation to deliver to us hereunder
in excess of seven (7) Required Albums. We may exercise our
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option for the Optional LP to be recorded and delivered to us during a
Contract Period by giving you reasonable, written notice of our
election to do so at any time prior to the expiration of that Contract
Period. Each Album required to be delivered to us in fulfillment of
your Recording Commitment is hereinafter sometimes referred to
generally as a "Required Album." Accordingly, you might be required to
record for and deliver to us as many as seven (7) Required Albums. The
Required Albums are sometimes referred to as the "First Album," "Second
Album," "Third Album," "Fourth Album," "Fifth Album," "Sixth Album,"
and "Seventh Album," respectively; and
(b) You shall deliver to us the First Album no later than
ninety (90) days after the date hereof. During each Renewal Period, you
shall deliver to us the Required Album no later than four (4) months
after the commencement of the particular Renewal Period. You shall not
without our prior written consent (which we shall not unreasonably
withhold), however, either (i) commence the recording of any Masters
for any Required Album prior to the date that is eight (8) months after
the date of your delivery to us of the immediately-prior Required Album
or (ii) deliver to us a Required Album prior to the date that is ten
(10) months after the date of your delivery to us of the
immediately-prior Required Album. Notwithstanding the foregoing, if you
deliver to us any Required Album (other than the First Album) after the
applicable delivery dates set forth in this subparagraph (b), you shall
not be in material breach of this Contract, provided that such Required
Album is delivered to us no later than sixty (60) days after we notify
you in writing of your failure to timely deliver to us such Required
Album. Notwithstanding anything to the contrary contained herein, you
shall deliver to us each Required Album as and when required hereunder
so that all seven (7) Required Albums are delivered to us within seven
(7) years after the date hereof.
4. Recording Procedures.
(a) You shall designate and submit to us for our approval
(which we shall not unreasonably withhold) the producer of each of the
Masters, the Musical Compositions or other Selections which shall be
embodied in those Masters, all other individuals rendering services in
connection with the recording of those Masters, the studios at which
those Masters shall be recorded, and the dates of recording of those
Masters (collectively referred to as "Recording Elements"). You shall
also prepare and submit to us for our approval, which we shall not
unreasonably withhold, a proposed budget for all "Recording Costs" (as
defined below) setting forth in such detail as is reasonably required
by us all costs and expenses to be paid or incurred for the production,
recording and delivery to us of the Masters ("Recording Budget"). No
recording sessions shall be commenced nor shall any commitments be made
or costs incurred hereunder with respect to any Masters unless and
until we shall have approved in writing each Recording Element and the
Recording Budget for those Masters. If we shall disapprove of any
Recording Element submitted by you or of the Recording
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Budget submitted by you, then our decision (including, at our election,
our designation of the Recording Budget or of one (1) or more Recording
Elements in substitution for the Recording Budget or any Recording
Elements submitted by you and disapproved by us) shall be final;
(b) You shall furnish to us at such times as we shall
require all union contract forms, report forms, invoices and other
information that we shall require so that we promptly may pay all
Recording Costs, otherwise comply with any of our obligations in
connection with the Masters, release Phonograph Records embodying the
Masters and otherwise exploit the Masters;
(c) At our election, recording sessions for the Masters
shall be conducted under our or our designee's recording license;
(d) Our representatives may attend recording sessions for
the Masters;
(e) You shall deliver to us the Masters promptly after their
completion. All original session tapes and any derivatives or
reproductions thereof shall be delivered to us concurrently, or, at our
election, maintained at a recording studio or other location designated
by us, in our name and subject to our control. Each Master shall be
subject to our approval as commercially and technically satisfactory
for the manufacture and sale of Phonograph Records, and, upon our
request, you shall re-record any Musical Composition or other Selection
until a Master that is commercially and technically satisfactory to us
shall have been obtained. Except with respect to the Masters
constituting the First Album, each Master shall be deemed to be
commercially satisfactory if that Master is substantially consistent in
artistic quality and form with your musical performances recorded in
Masters previously delivered to and accepted by us in fulfillment of
your Recording Commitment;
(f) Each Master shall embody your vocal and instrumental
performances as the sole featured artist of a single Musical
Composition and shall be newly-recorded in its entirety in a recording
studio. Accordingly, no Masters shall be recorded in whole or in part
at live concerts or other live performances. Each Required Album shall
embody recordings of no fewer than ten (10) and no more than thirteen
(13) Musical Compositions. You shall not record or deliver hereunder
nor shall we be obligated to accept Masters constituting a Multiple
Album. If, however, you shall do so and we shall accept those Masters
hereunder, then, at our election, for the purpose of calculating the
number of Masters recorded and delivered hereunder, those Masters shall
be deemed to constitute only one (1) Album;
(g) Any Master Recording which is not recorded or delivered
in all respects in accordance with the terms hereof shall not apply
towards the
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fulfillment of your Recording Commitment, unless we otherwise consent
in writing. Furthermore, if we shall make any payments with respect to
any Master Recording which is not recorded for or delivered to us in
all respects in accordance with the terms hereof, you shall pay to us,
upon our demand, the amount thereof and, without limiting our other
rights and remedies, we may deduct that amount paid or incurred by us
for any reason from any monies payable by us hereunder; and
(h) If for any reason you delay the commencement of or are
unavailable for any recording sessions for the Masters, you shall pay
us, upon our demand, an amount equal to the expenses or charges paid or
incurred by us by reason thereof. Without limiting our other rights and
remedies, we may deduct that amount paid or incurred by us for any
reason from any monies payable by us hereunder. Notwithstanding
anything to the contrary contained in this subparagraph (h), we shall
not demand you to pay to us the amount of any expenses or charges paid
or incurred by us by reason of your delaying the commencement of or
unavailability for any recording sessions if such expenses or charges
were due to any reason which was beyond your reasonable control, or
which you could not have reasonably avoided; provided, however, that we
shall have the right to deduct the amount of any such expenses or
charges paid or incurred by us from any monies payable by us hereunder
other than mechanical royalties.
5. Recording Costs.
(a) We shall pay the Recording Costs of those Masters
recorded at recording sessions conducted in accordance with the terms
hereof in an amount not in excess of the approved Recording Budget. If
the Recording Costs of any Masters shall exceed the Recording Budget
therefor designated by us or approved by us in writing for any reason,
other than solely in respect of our wrongful act or omission, you shall
be solely responsible for and shall pay promptly the excess. If,
however, we pay the excess, you shall pay to us, upon our demand, the
amount thereof and, without limiting our other rights and remedies, we
may deduct all such amounts paid or incurred by us for any reason from
any monies payable by us hereunder. Notwithstanding anything to the
contrary contained in this subparagraph (a), we shall not demand you to
pay to us the amount of any excess Recording Costs paid or incurred by
us if such excess was due to any reason which was beyond your
reasonable control or which you could not have reasonably avoided;
provided, however, that we shall have the right to deduct the amount of
any such excess Recording Costs paid or incurred by us from any monies
payable by us hereunder. You shall be solely responsible for and shall
pay any payments to any individuals rendering services in connection
with the recording of the Masters which exceed union scale unless the
excess and the recipient thereof shall have been specified in the
approved Recording Budget. You shall also be solely responsible for and
shall pay any
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penalties incurred for late payments caused by your delay in submitting
union contracts forms, report forms, or invoices or other documents.
If, however, we pay any excess not approved by us in writing or any
penalties, you shall pay to us, upon our demand, the amount thereof,
and, without limiting our other rights and remedies, we may deduct that
amount from any monies payable by us hereunder; and
(b) The term "Recording Costs" shall include, without
limitation, all minimum union scale payments made to you, all payments
made to any other individuals rendering services in connection with the
production and recording of the Masters (including, without limitation,
the individual producers and co-producers of the Masters), all other
payments which are made pursuant to any applicable law or regulation or
the provisions of any collective bargaining agreement between us and
any union or guild (including, without limitation, payroll taxes and
payments to union pension and welfare funds and/or health and
retirement funds), all amounts paid or incurred for studio or hall
rentals, tape, engineering, editing, mixing, remixing, instrument
rentals and cartage, mastering, transportation and accommodations,
immigration clearances, trademark and service mark searches and
clearances, any so-called "per diems" for any individuals (including
you) rendering services in connection with the recording of the
Masters, together with all other amounts paid or incurred in connection
with the production, recording and delivery to us of the Masters.
Recording Costs shall be recoupable from royalties payable by us
hereunder.
6. Rights.
(a) All Master Recordings and Audio-Visual Recordings
recorded during the Term which embody your performances, from the
inception of the recording thereof, and all artwork created for use in
connection with any reproduction thereof ("Artwork") shall be deemed,
for purposes of copyright law throughout the universe, works made for
hire for us by you and all other persons rendering services in
connection with those Master Recordings, Audio-Visual Recordings and
Artwork as our employees for hire. Those Master Recordings and
Audio-Visual Recordings, from the inception of the recording thereof,
and all Phonograph Records and other reproductions made therefrom,
together with the performances embodied therein and all copyrights
therein and thereto and all renewals and extensions thereof, and all
Artwork and all copyrights in and to all Artwork and all renewals and
extensions thereof, shall be entirely our property throughout the
universe, free of any claims whatsoever by you, or any other person,
firm, or corporation. Accordingly, we shall have the exclusive right to
obtain registration of copyright (and all renewals and extensions)
throughout the universe in those Master Recordings, Audio-Visual
Recordings and Artwork in our name, as the owner and author thereof. If
for any reason we shall be deemed not to be the author of those Master
Recordings, Audio-Visual Recordings or Artwork, this Contract shall
constitute an irrevocable transfer to us
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of ownership of copyright (and all renewals and extensions) throughout
the universe in those Master Recordings, Audio-Visual Recordings or
Artwork (as applicable) and, accordingly, you hereby grant, transfer,
convey and assign directly to us the entire right, title and interest
throughout the universe, including, without limitation, the copyright,
the right to secure copyright registration and any and all copyright
renewal rights, in and to all Master Recordings and Audio-Visual
Recordings recorded during the Term which embody your performances and
in and to all Artwork;
(b) You shall, upon our request, cause to be executed and
delivered to us transfers of ownership of copyright (and all renewals
and extensions) in those Master Recordings, Audio-Visual Recordings and
Artwork and any other documents as we may deem necessary or appropriate
to vest in us the rights granted to us in this Contract, and you hereby
irrevocably appoint us your attorney-in-fact for the purpose of
executing those transfers of ownership and other documents in your
names;
(c) Without limiting the generality of the foregoing, we and
any person, firm, or corporation designated by us shall have the
exclusive, perpetual right throughout the universe to manufacture,
sell, distribute and advertise Phonograph Records, Audio-Visual Records
and other reproductions embodying those Master Recordings or
Audio-Visual Recordings under any trademarks, trade names or labels,
and to lease, license, convey and otherwise exploit and use those
Master Recordings by any method (whether now known or unknown) and in
any medium (whether now known or unknown) and to perform publicly
Phonograph Records, Audio-Visual Records and other reproductions
embodying those Master Recordings or Audio-Visual Recordings, all upon
such terms as we may approve, or we may refrain from doing any or all
of the foregoing;
(d) If you are entitled to any reversion of the copyright or
other right, title and interest in and to Masters (or any of them)
pursuant to the laws of the United States or any other country of the
world, and that reversion is effected, then you hereby irrevocably
license to us exclusively the entire worldwide right, title and
interest, including, without limitation, the copyright in and to any
such Master so acquired by you pursuant to the laws of the United
States or any other country of the world, all for the duration of the
copyright (and any renewals or extensions thereof) in and to such
Master ("License Period"). In that event, we and any person, firm or
corporation designated by us shall have the exclusive right throughout
the universe during the License Period to manufacture, sell, distribute
and advertise Phonograph Records, Audio-Visual Records and other
reproductions embodying the Masters or Audio-Visual Recordings under
any trademarks, trade names or labels or to lease, license, convey and
otherwise exploit and use those Masters or Audio-Visual Recordings by
any method (whether now known or unknown) and in any medium (whether
now known or unknown) and to perform publicly Phonograph Records,
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Audio-Visual Recordings and other reproductions embodying the Masters
or Audio-Visual Recordings all upon such terms as we may approve, or we
may refrain from doing any or all of the foregoing, all in accordance
with the provisions of this Contract. We shall have no obligation to
pay to you any monies in connection with the grant set forth in this
subparagraph 6(d) except that we shall continue to credit to your
royalty account hereunder royalties earned by you in accordance with
the provisions hereof on exploitations of the Masters occurring during
the License Period as if we had continued to own the entirety of all
right, title and interest, including, without limitation, the copyright
in and to the Masters or Audio-Visual Record Recordings in accordance
with the provisions of subparagraph 6(a), (b) and (c) above. You
expressly acknowledge and agree that no provision of any applicable
law, rule or regulation (including, without limitation, the copyright
laws and regulations of the United States or Canada) permits you to
terminate the transfer, grant, conveyance or assignment to us of the
copyright in and to Master Recordings or Audio-Visual Recordings
provided in this paragraph 6 or any other reversion of the copyright or
other right, title and interest in and to the Masters. If any such law,
rule or regulation shall apply at any time after the date hereof, you
shall not exercise any rights pursuant to that law, rule or regulation;
and
(e) All matters relating to trademarks, notices, including,
without limitation, UPC symbols (i.e., barcoding), or disclosures
deemed advisable by us or our attorneys, and any matter other than the
cover layout and the picture of the art to be used on the particular
Required Album will be determined by us in our sole discretion.
7. Name and Likeness.
(a) We and any person, firm or corporation designated by us
shall have the perpetual, worldwide right to use and to permit others
to use your name (both legal and professional, and whether presently or
hereafter used by you), likeness, and other identification, and
biographical material concerning you, and the name and likeness of any
producer rendering services in connection with Master Recordings
recorded by you during the Term for purposes of trade and advertising.
We shall have the further right to refer to you during the Term as our
exclusive recording artist and you in your activities in the
entertainment field shall use reasonable efforts to be billed and
advertised during the Term as our exclusive recording artist. The
rights granted to us pursuant to this subparagraph 7(a) with respect to
your name, likeness, other identification and biographical material
concerning you shall be exclusive during the Term and nonexclusive
thereafter. Accordingly, but without limiting the generality of the
foregoing, you shall not authorize or permit any person, firm, or
corporation other than us to use during the Term your legal or
professional name or your likeness in connection with the advertising
or sale of Phonograph Records. Notwithstanding anything to the contrary
contained herein, during the Term, you
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shall not use any name other than the professional name utilized by you
as of the date of this Contract without first obtaining our prior
written consent thereto;
(b) You are the sole owner of each professional name used by
you during the Term and no other person, firm or corporation has or
will have the right to use that name in connection with Phonograph
Records during the Term. We shall have the right, at our election, to
cause a search to be instituted to determine whether there have been
any third party uses of any names used by you for Phonograph Record
purposes. Further, we shall have the right, at our election, to apply
for registration of your name to be made in favor of you for Phonograph
Record and/or other entertainment purposes in the United States Patent
and Trademark Office or such other federal institution as may then be
charged with accepting those registrations. Any amounts paid by us in
connection with any search or registration shall be deemed to be
Recording Costs pursuant to subparagraph 5(b) above. If any search
undertaken by us indicates or leads us reasonably to believe that your
name should not be used hereunder, then you and we shall determine
mutually a substitute name to be used by you. Nothing contained herein
shall release you from your indemnification of us in respect of our use
of any of your names, whether legal or professional or otherwise; and
(c) (i) Intentionally deleted;
(ii) Intentionally deleted; and
(iii) Intentionally deleted.
8. Advances. We shall pay to you as advances recoupable from
royalties earned by you hereunder the following amounts for the following
Required Albums payable at the following times:
(a) For the First Album, Twenty-Five Thousand Dollars
($25,000), payable promptly after the execution of this Contract
("Execution Advance"), and the Fund Balance (defined below) payable
promptly after the "Delivery Date" (defined below) for the First Album.
The "Recording Fund" for the First Album shall be Three Hundred
Twenty-Five Thousand Dollars ($325,000); and
(b) For each Required Album other than the First Album: (A)
the "Pre-Delivery Payment" (defined below), payable promptly after our
receipt of your written notice indicating that recording sessions for
the Required Album for which the advance is payable have actually
commenced in accordance with all of the terms of this Contract
(including, without limitation, the provisions of subparagraph 4(a)
above); and (B) the Fund Balance (defined below), payable promptly
after the Delivery Date. For each Required Album, if any, after the
First
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Album, the Recording Fund shall be the "Formula Amount" (defined
below), but no less than the "Minimum Amount" and no more than the
"Maximum Amount" set forth in the Schedule below:
SCHEDULE
--------
The "Formula Amount" for the Second Album shall mean an amount equal to
two-thirds (2/3) of the royalties (after retention of reserves) earned
by you hereunder from Net Sales through Normal Retail Distribution
Channels in the United States of the First Album, computed as of end of
the applicable "Fund Calculation Period" (defined below) and for each
Required Album after the Second Album shall mean an amount equal to the
product of (i) one-half (1/2) and (ii) two-thirds (2/3) of the
royalties (after retention of reserves) earned by you hereunder from
Net Sales through Normal Retail Distribution Channels in the United
States of the two (2) Required Albums initially released immediately
prior to the Required Album for which the Formula Amount is being
calculated, computed as of the end of the applicable Fund Calculation
Period for Required Albums in question. The term "Fund Calculation
Period" shall mean the period commencing on date of the initial
commercial release in the United States of the Required Album for which
royalty earnings are being computed and ending on the date twelve (12)
months thereafter;
(c) The term "Pre-Delivery Payment" shall mean an amount
equal to ten percent (10%) of the "Minimum Amount" for the applicable
Required Album set forth in the Schedule above. The term "Fund Balance"
shall mean the amount by which the Recording Fund exceeds the aggregate
of the Recording Costs for the applicable Required Album, the
Pre-Delivery Payment for the applicable Required Album (or the
Execution Advance with respect to the First Album) and any other
advances paid in connection with the applicable Required Album. The
term "Delivery Date" shall mean the later of the date of your delivery
to us of all Masters constituting the applicable Required Album in
accordance with all of the terms of this Contract and the date on which
we determine the aggregate Recording Costs for that Required Album; and
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(d) You acknowledge and agree that any and all advances paid
by us hereunder shall constitute prepayment of session union scale to
you, and you agree to timely complete and appropriately deliver any
documentation required by the applicable union to document and
effectuate each such prepayment.
9. Royalties.
(a) In consideration of our copyright ownership set forth
herein, any rights licensed to us herein, our right to use your name,
likeness and biographical materials as provided herein, and the other
agreements, representations and warranties contained herein, on Net
Sales of Phonograph Records embodying Masters, we shall pay to you a
royalty computed by multiplying the Royalty Base Price, less the
deductions hereafter provided, by the applicable royalty rate set forth
below:
(i) On Phonograph Records sold in the United States the
royalty rate shall be:
(A) (1) Fifteen percent (15%) on Albums;
(2) The royalty rate pursuant to subparagraph
9(a)(i)(A)(1) above on Net Sales through Normal
Retail Distribution Channels in the United
States ("Qualifying Sales") of a particular
Required Album embodying solely newly-recorded
Masters in the form of Conventional cassette
tapes and Compact Discs ("Qualifying Album")
which exceed five hundred thousand (500,000)
units, but which do not exceed one million
(1,000,000) units, shall be the royalty rate
set forth in that subparagraph, plus
one-quarter percent (.25%). The royalty rate
pursuant to subparagraph 9(a)(i)(A)(1) above on
Qualifying Sales of a particular Qualifying
Album in the United States which exceed one
million (1,000,000) units shall be the royalty
rate set forth in that subparagraph (without
regard to the operation of the provisions of
this subparagraph 9(a)(i)(A)(2)) plus one-half
percent (.50%). Any increases in the royalty
rate set forth in subparagraph 9(a)(i)(A)(1)
above resulting from the operation of the
provisions of this subparagraph 9(a)(i)(A)(2)
shall be disregarded for the purpose of
computing any other royalty rates pursuant to
this paragraph 9 which apply to sales of
Records outside the United States or which are
a percentage of or otherwise based upon the
royalty rate set forth in subparagraph
9(a)(i)(A)(1) above; and
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(B) Ten percent (10%) on Singles;
(ii) On Phonograph Records sold in Canada the royalty rate
shall be:
(A) Twelve percent (12%) on Albums; and
(B) Eight percent (8%) on Singles;
(iii) On Phonograph Records sold in the United Kingdom the
royalty rate shall be:
(A) Twelve percent (12%) on Albums; and
(B) Eight percent (8%) on Singles;
(iv) On Phonograph Records sold in Austria, Belgium,
Denmark, Finland, France, Germany, Greece, Holland, Italy, Norway,
Portugal, Spain, Sweden or Switzerland, the royalty rate shall be:
(A) Ten percent (10%) on Albums; and
(B) Six and one-half percent (6.50%) on Singles;
(v) On Phonograph Records sold in Japan, Australia or New
Zealand, the royalty rate shall be:
(A) Ten percent (10%) on Albums; and
(B) Six and one-half percent (6.50%) on Singles; and
(vi) On Phonograph Records sold outside the United States,
Canada, the United Kingdom and those countries set forth in
subparagraphs 9(a)(iv) and (v) above, the royalty rate shall be:
(A) Eight percent (8%) on Albums; and
(B) Five percent (5%) on Singles;
(b) Notwithstanding the foregoing:
(i) (A) On Phonograph Records sold through a direct
mail or mail order distribution method (including, without
limitation through so-called "record clubs"), or through any
combination of the
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foregoing, the royalty rate shall be one-half (1/2) of the
otherwise applicable royalty rate, but in no event shall
your royalty in respect of those sales exceed an amount
equal to fifty percent (50%) of the Net Receipts from the
sale of those Phonograph Records (whether or not sold by an
affiliate of ours);
(B) On Phonograph Records sold through retail stores
in connection with special radio or television
advertisements (sometimes referred to as "key outlet
marketing") ("Key Outlet Campaign") whether alone or in
combination with any direct mail or mail order distribution
method, the royalty rate shall be one hundred percent (100%)
of the otherwise applicable royalty rate and notwithstanding
anything to the contrary herein, we shall have the right to
recoup fifty percent (50%) of any and all of the costs paid
or incurred by us or our licensees in respect of such Key
Outlet Campaigns from any and all royalties earned by you
under this Contract;
(ii) On Phonograph Records sold for use as premiums or in
connection with the sale, advertising, or promotion of any other
product or service, the royalty rate shall be one-half (1/2) of the
otherwise applicable royalty rate and the Royalty Base Price of
those Phonograph Records shall be deemed to be an amount equal to
the monies actually received by us from the sale of those Phonograph
Records, unless manufactured and sold by an affiliate or licensee of
ours, in which event the Royalty Base Price shall be deemed to be
the price used by that affiliate or licensee in accounting to us;
(iii) On Mid-Price Records the royalty rate shall be
two-thirds (2/3) of the otherwise applicable royalty rate, and on
Budget Records the royalty rate shall be one-half (1/2) of the
otherwise applicable royalty rate;
(iv) On Phonograph Records sold to the United States
Government, its subdivisions, departments or agencies (including
Phonograph Records sold for resale through military facilities) or
to educational institutions or libraries, the royalty rate shall be
one-half (1/2) of the otherwise applicable royalty rate;
(v) On Long-Play Singles, the royalty rate shall be one-half
(1/2) of the otherwise applicable royalty rate for Albums, and on
EPs the royalty rate shall be two-thirds (2/3) of the otherwise
applicable royalty rate for Albums;
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(vi) On Multiple Albums, the royalty rate shall be the
lesser of: (A) the otherwise applicable royalty rate and (B) the
otherwise applicable royalty rate multiplied by a fraction, the
numerator of which is the Royalty Base Price of the Multiple Album
and the denominator of which is the product of the Royalty Base
Price of a top-line single-disc Album in the configuration in
question and the number of discs contained in the Multiple Album;
(vii) On Phonograph Records in the form of Digital Records
the royalty rate shall be:
(A) Eighty percent (80%) of the otherwise applicable
royalty rate for all Digital Records other than Compact
Discs; and
(B) One hundred percent (100%) of the otherwise
applicable royalty rate on Compact Discs;
(viii) On Masters licensed by us to others for their
manufacture and sale of Phonograph Records or for any other uses
(other than those for which a royalty is payable in accordance with
subparagraph (x)(B) below), your royalty shall be an amount equal to
fifty percent (50%) of our Net Receipts from the sale of those
Phonograph Records or from those other uses of the Masters;
(ix) On Audio-Visual Recordings embodying the performances
of Artist, your royalty shall be as follows:
(A) On Audio-Visual Records your royalty shall be
computed in accordance with the provisions of this paragraph
9 applicable to Albums, except on sales of Audio-Visual
Records in the United States the royalty rate pursuant to
subparagraph 9(a)(i) above shall be deemed to be twenty
percent (20%) and on sales of Audio-Visual Records outside
of the United States the royalty rate pursuant to
subparagraphs 9(a)(ii) through 9(a)(v) above shall be deemed
to be fifteen percent (15%). Notwithstanding anything to the
contrary contained herein, the royalty payable to you
pursuant to this subparagraph (ix)(A) on the exploitation of
Audio-Visual Recordings in the United States or Canada shall
be inclusive of any royalties or other monies required to be
paid or incurred by us (or otherwise deducted from monies
payable to us) to any person, firm or corporation for the
synchronization, reproduction and/or public performance of
any Selection in the Audio-Visual Recording in question and,
without limiting any of our other rights or remedies
hereunder or otherwise, we shall have the right to deduct
from the
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royalty payable to you pursuant to this subparagraph (ix)(A)
an amount equal to those sums required to be paid to any
person, firm or corporation in connection therewith;
(B) On Audio-Visual Records manufactured and sold by
a non-affiliated licensee of ours, however, in the United
States or elsewhere, your royalty shall be an amount equal
to fifty percent (50%) of our Net Receipts from the sale of
those Audio-Visual Records (rather than the royalty computed
in accordance with the immediately preceding subparagraph
(A)); and
(C) Notwithstanding anything to the contrary
contained herein, the exploitation of Audio-Visual
Recordings by means of any so-called "video jukebox" shall
be deemed to be non-royalty bearing and promotional in
nature for all purposes of this Contract; and
(D) On Mid-Price Audio-Visual Records the royalty
rate shall be three-fourths (3/4) of the otherwise
applicable royalty rate, and on Budget Audio-Visual Records
the royalty rate shall be one-half (1/2) of the otherwise
applicable royalty rate;
(x) On New Records your royalty shall be the lesser of
the following:
(A) Seventy-five percent (75%) of the otherwise
applicable royalty rate applied to the Royalty Base Price of
the New Record concerned; and
(B) An amount equal to the product of (1) our Net
Receipts from the exploitation of those New Records, and (2)
the otherwise applicable royalty rate;
(c) Notwithstanding the foregoing:
(i) No royalties shall be payable on Phonograph Records
furnished as free or bonus Phonograph Records to members,
applicants, or other participants in any record club or other direct
mail distribution method; on Phonograph Records distributed for
promotional purposes to radio stations, television stations or
networks, record reviewers, or other customary recipients of
promotional Phonograph Records; on so-called "promotional sampler"
Phonograph Records; on Phonograph Records sold as scrap or as
"cut-outs"; or on Phonograph Records (whether or not intended for
sale by the recipient) furnished on a no-charge or free basis (such
as, but not limited to, Phonograph Records commonly described in
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the record industry as "free goods" or "freebies") or sold at less
than fifty percent (50%) of their regular wholesale price to
distributors, subdistributors, dealers, or others, whether or not
the recipients thereof are affiliated with us. We shall not
distribute Phonograph Records embodying solely Masters in the United
States at no-charge for sale by the recipient thereof other than in
accordance with our then-current general policy applicable at the
time of our distribution of those Records which, in the United
States on the date of this Contract, is the distribution of the
following Phonograph Records at no charge intended for sale by the
recipient thereof (1) on a regular basis, as follows: Fifteen (15)
Albums and EPs in the form of Conventional vinyl discs and cassette
tapes for each eighty-five (85) of those Albums and EPs sold (that
is, fifteen (15) Albums and EPs in the form of conventional vinyl
discs and cassette tapes are distributed at no charge out of each
one hundred (100) of those Albums and EPs distributed for sale by
the recipient thereof); twenty (20) Albums and EPs in the form of
Digital Records (including, without limitation, Compact Discs) for
each eighty (80) of those Albums sold (that is, twenty (20) Albums
in the form of Digital Records are distributed at no charge out of
each one hundred (100) of those Albums distributed for sale by the
recipient thereof); and thirty (30) Singles and Long-Play Singles in
all forms and configurations for each seventy (70) Singles and
Long-Play Singles sold in any form or configuration (that is, thirty
(30) Singles and Long-Play Singles in all forms and configurations
are distributed at no charge out of each one hundred (100) Singles
and Long-Play Singles distributed in any form or configuration for
sale by the recipient thereof); and thirty (30) Phonograph Records
other than Albums, EPs, Singles and Long-Play Singles, if any, for
each seventy (70) of those Phonograph Records sold in any form or
configuration (that is, thirty (30) Phonograph Records other than
Albums, EPs, Singles and Long-Play Singles, if any, are or would be
distributed at no charge out of each one hundred (100) of those
Phonograph Records distributed for sale by the recipient thereof);
and (2), from time to time in connection with short-term or other
special sales programs of limited duration, such additional Records
as we in the exercise of our business judgment determine. We shall
distribute Phonograph Records in the form of New Records embodying
solely Masters in the United States at no-charge for sale by the
recipient thereof in accordance with our then-current general policy
applicable to Compact Discs at the time of our distribution of those
Records;
(ii) Royalties on Phonograph Records (whether or not
intended for sale by the recipient thereof) sold at a discount to
distributors, subdistributors, dealers, or others, whether or not
affiliated with us (except for Phonograph Records sold at less than
fifty percent (50%) of their regular wholesale price, for which no
royalties are payable hereunder)
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shall be reduced in the same proportion as the regular wholesale
price of those Phonograph Records is reduced on those sales;
(iii) For purposes of computing royalties, there shall
be deducted from the Royalty Base Price (or other applicable price,
if any, upon which royalties are calculated) of Phonograph Records
hereunder an amount equal to twenty percent (20%) thereof for all
Phonograph Records in the form of Conventional cassette tapes and
twenty-five percent (25%) thereof for Phonograph Records in all
other forms, whether now known or hereafter devised;
(iv) Phonograph Records distributed by any of our
affiliates shall be deemed sold for the purposes of this Contract
only if sold by that affiliate to one of its independent third party
customers and final payment is received therefor by us in United
States Dollars in the United States;
(v) The royalty payable to you hereunder on a Phonograph
Record or other device embodying Masters together with other Master
Recordings shall be computed by multiplying the otherwise applicable
royalty rate by the "Reduction Factor." As used herein, the term
"Reduction Factor" shall mean, at our election, (A) a fraction, the
numerator of which shall be the number of Selections contained on
the Masters which are embodied on that Phonograph Record or other
device and the denominator of which shall be the total number of
Selections embodied on that Phonograph Record or other device or (B)
a fraction, the numerator of which shall be the playing time of the
Selections contained on the Masters which are embodied on that
Phonograph Record or other device and the denominator of which shall
be the total playing time of the Phonograph Record or other device
in question. For any Phonograph Record or other device for which a
finite running or playing time does not exist, the running or
playing time of that Phonograph Record or other device shall be
deemed to be one hundred twenty (120) minutes; and
(vi) The royalty payable to you hereunder and the
Recording Costs hereunder on a Master embodying your performances
jointly with any other artist or musician to whom we are obligated
to pay a royalty in respect of that Master shall be computed by
multiplying the otherwise applicable royalty rate and Recording
Costs by a fraction, the numerator of which shall be one (1) and the
denominator of which shall be the sum of one (1) and the total
number of other artists or musicians whose performances are embodied
on that Master; and
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(d) You hereby expressly authorize us and our
licensees to collect and receive on your behalf any royalties or other
monies which may be payable in the United States pursuant to the Audio
Home Recording Act allocable to featured performers and which is
otherwise determined to be payable to you in respect of your
performances in Masters ("AHRA Monies"). We shall credit to your
account that portion of AHRA Monies received by us which is
specifically allocable to Masters and otherwise payable to you (less
any portion thereof which may be payable to any third party, including,
without limitation, any producer of Masters). You shall execute any
further documentation which we reasonably deem necessary or desirable
to effectuate the foregoing provisions of this subparagraph (d).
Without limiting the foregoing, you shall not have the right hereunder
or otherwise to be paid or to have credited to your account any portion
of AHRA Monies received by us or otherwise received on our behalf
pursuant to the Audio Home Recording Act which is allocable to the
owner of the sound recording.
10. Royalty Payments and Accountings.
(a) We shall send to you statements for royalties payable
hereunder on or before the date ninety (90) days after the end of each
of our then-current semi-annual accounting periods (currently ending on
June 30 and December 31), together with payment of royalties, if any,
earned by you hereunder during the semi-annual period for which the
statement is rendered (based on our receipts in the United States
during the accounting period for which the statement is rendered), less
all advances and charges under this Contract. Notwithstanding the
foregoing, after the Term, no royalty statement shall be required to be
rendered for any semi-annual accounting period in which less than Five
Thousand Dollars ($5,000) in royalties are credited to your account
(whether by exploitation of Masters or liquidation of reserves) unless
(i) royalties are otherwise actually payable to you for that
semi-annual accounting period; or (ii) you notify us in writing of your
request that we render to you a statement for the semi-annual
accounting period in which we receive that request on the date
otherwise required hereunder. We shall have the right to retain, as a
reserve against charges, credits, or returns, such portion of payable
royalties as shall be commercially reasonable and customary in the
industry in our best business judgment. You shall reimburse us on
demand for any overpayments, and we may also deduct the amount thereof
from any monies payable to you hereunder. Royalties paid by us on
Phonograph Records subsequently returned shall be deemed overpayments;
(b) No royalties shall be payable to you on sales of
Phonograph Records or other exploitations of Masters by any of our
affiliates or licensees until payment on those sales has been received
by us in the United States. Sales or other exploitations by an
affiliate or licensee shall be deemed to have occurred in the
semiannual accounting period during which that affiliate or
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licensee shall have rendered to us and we shall have received in the
United States accounting statements and payments for those sales or
other exploitations of Masters;
(c) (i) Royalties on exploitations of Masters outside
of the United States shall be computed in the national
currency in which our licensees or affiliates or other
distributors pay us, shall be credited to your royalty account
hereunder at the same rate of exchange at which our licensees
or affiliates or other distributors pay us, and shall be
proportionately subject to any foreign withholding or
comparable taxes which may be imposed upon our receipts. You
shall not be entitled to any portion of a tax credit which may
be available to us or to any of our licensees or affiliates in
connection with any foreign taxes withheld from our receipts,
from the applicable price in computing the Royalty Base Price,
or from any other source; and
(ii) If we shall not receive payment in United
States dollars in the United States for any exploitations of
Masters outside of the United States, royalties on those
exploitations shall not be credited to your royalty account
hereunder. If all advances and other recoupable charges under
this Contract are then-currently recouped and if we are able
to do so, we shall accept payment for those exploitations in
foreign currency and shall deposit in a foreign bank or other
depository, at your expense, in that foreign currency, that
portion thereof, if any, as shall equal the royalties which
would have been payable to you hereunder on those
exploitations had payment for those exploitations been made to
us in United States dollars in the United States. The
foregoing deposit shall not be reflected on your accounting
statements hereunder. Deposit as aforesaid shall fulfill our
royalty obligations hereunder as to those sales. If any law,
ruling or other governmental restriction limits the amount an
affiliate or licensee can remit to us, we may reduce your
royalties hereunder by an amount proportionate to the
reduction in our affiliate's or licensee's (as appropriate)
remittance to us;
(d) You shall be deemed to have consented to all royalty
statements and all other accountings rendered or required to be
rendered by us hereunder and each royalty statement and other
accounting shall be conclusive, final, and binding, shall constitute an
account stated, and shall not be subject to any objection for any
reason whatsoever, unless you give us notice stating the specific basis
for that objection within two (2) years after the date rendered or
required to be rendered. You may not maintain any action, suit, or
proceeding of any nature against us in respect of any royalty statement
or other accounting rendered or required to be rendered by us hereunder
(or in respect of the accounting period to which it relates or was to
relate) unless you commence that action, suit, or proceeding against us
in a court of competent jurisdiction within
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two (2) years after the date rendered or required to be rendered. If
you shall commence an action, suit, or proceeding against us concerning
royalty statements or other accountings rendered or required to be
rendered by us to you hereunder, the scope of that action, suit or
proceeding shall be limited to a determination of the amount of
royalties, if any, payable to you for the accounting periods in
question, and your sole remedy shall be the recovery of those
royalties;
(e) We shall maintain books and records concerning the sale
of Phonograph Records hereunder. You shall have the right to designate
an independent certified public accountant on your behalf (who shall
not be compensated on a contingent fee basis), at your own expense, to
examine those books and records (but not any of our books or records
relating to the manufacture of Phonograph Records hereunder) solely for
the purpose of verifying the accuracy of royalty statements and other
accountings rendered by us hereunder, only during our normal business
hours and only upon reasonable written notice. Our books and records
relating to a particular royalty statement or other accounting may be
examined only within two (2) years after the date rendered or required
to be rendered. We shall have no obligation to permit you to examine
our books or records relating to any particular royalty statement or
other accounting more than once. Prior to rendering a report to you
with respect to the examination of our books and records as aforesaid,
the independent certified public accountant engaged by you shall first
review his or her tentative written findings with a designated
representative of our finance department in order to remedy any factual
errors and clarify any issues that may have resulted from
misunderstanding. You hereby acknowledge that our books and records
contain confidential trade information. Neither you nor your
independent certified public accountant or other representatives shall
communicate at any time to any others or use on behalf of any other
person, firm or corporation any facts or information obtained as a
result of any such examination of our books and records. Further, prior
to the commencement of any examination of our books and records in
accordance with the provisions of the subparagraph (e), you shall cause
the independent certified public accountant engaged by you to sign a
letter in a form approved by us which acknowledges his or her agreement
(and the agreement of his or her firm) to be bound by the foregoing.
The rights hereinabove granted to you shall constitute your sole and
exclusive rights to examine our books and records;
(f) We shall have the right to deduct from any monies
payable to you hereunder any amounts paid by us to you or to any
person, firm or corporation representing you or incurred by us on your
behalf or on behalf of any person, firm or corporation representing
you, if those monies are not otherwise required to be paid or incurred
by us hereunder (unless we expressly agree in writing that the payment
in question is non-deductible or is only recoupable from royalties
earned by you hereunder). Accordingly, all amounts paid or incurred by
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us for the services of third parties to market and promote sales of
Phonograph Records embodying Masters shall be recoupable from royalties
earned by you hereunder; and
(g) We shall have the right to deduct from any monies
payable to you hereunder any amounts which are required to be deducted
from any of those monies under any statute, regulation, treaty or other
law, or under any union or guild agreement, and you shall promptly
execute and deliver to us any forms or other documents as may be
required in connection therewith. If we fail for any reason to deduct
and instead pay any of those monies required to be deducted from monies
payable to you hereunder, and if, as a result, we are required by any
statute, regulation, treaty or other law or union or guild agreement to
pay to any third party any amounts which were paid to you but which
were required to be deducted, then, without limiting any of our other
rights or remedies in that event, you shall pay to us, upon our demand,
the amount of those monies which were paid to you but which were
required to be deducted, or, at our election, we may deduct from any
monies payable to you hereunder the amount of those monies paid to you
but which were required to be deducted.
11. Musical Composition Licenses.
(a) You hereby grant to us and our designees the irrevocable
non-exclusive right to reproduce each Controlled Composition on
Phonograph Records and to distribute those Phonograph Records in the
United States and Canada on the following terms and conditions:
(i) Mechanical royalties shall be payable for Controlled
Compositions on Net Sales of Phonograph Records in the United
States and Canada at the following rates:
(A) On Phonograph Records sold in the United States,
the rate for each Controlled Composition embodied thereon
shall be the United States Controlled Composition Mechanical
Rate. The term "United States Controlled Composition
Mechanical Rate" shall mean an amount equal to seventy-five
percent (75%) of the "United States Mechanical Rate." The
term "United States Mechanical Rate" shall mean an amount
equal to the minimum statutory royalty rate (without regard
to playing time) provided in the United States Copyright Act
for the reproduction of Musical Compositions as of the
"Determination Date" (defined below);
(B) On Phonograph Records sold in Canada, the rate
for each Controlled Composition embodied thereon shall be
the Canadian Controlled Composition Mechanical Rate. The
term "Canadian Controlled Composition Mechanical Rate" shall
mean an
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amount equal to seventy-five percent (75%) of the Canadian
Mechanical Rate. The term "Canadian Mechanical Rate" shall
mean an amount equal to the minimum statutory royalty rate
(without regard to playing time) provided in the Canadian
Copyright Act for the reproduction of Musical Compositions
as of the Determination Date. If no such statutory royalty
rate exists, then the term "Canadian Mechanical Rate" shall
mean the minimum, standard mechanical royalty rate provided
in mechanical licenses between record companies and
unrelated publishers in Canada which are issued by
C.M.R.R.A. (or any successor) as of the Determination Date.
If no such standard mechanical royalty rate exists, however,
then the term "Canadian Mechanical Rate" shall mean the
mechanical royalty rate which we may, in good faith,
negotiate at arm's-length with unrelated publishers
effective as of the Determination Date. In no event,
however, shall the number of Canadian pennies constituting
the Canadian Mechanical Rate exceed the number of United
States pennies constituting the United States Mechanical
Rate in effect as of the Determination Date; and
(C) The term "Determination Date" shall mean the
date of delivery to us of the first (1st) Master embodying
the Musical Composition in question or, if earlier, the date
on which that first (1st) Master was required to be
delivered to us hereunder;
(ii) Notwithstanding the foregoing: The mechanical
royalty rate on a Controlled Composition which is an
arrangement of a public domain work shall be that percentage
of the United States Controlled Composition Mechanical Rate
or the Canadian Controlled Composition Mechanical Rate, as
applicable, that is equal to the percentage of the
arrangement of the Controlled Composition which is original
in the arrangement and therefore subject to copyright in
accordance with the rules and regulations of ASCAP and/or BMI
and for which ASCAP and/or BMI provides written documentation
of that percentage of the originality in and to that
arrangement of a Controlled Composition; the mechanical
royalty rate for a Controlled Composition recorded in an EP,
Long-Play Single, Mid-Price Record, Budget Record or Records
sold through record clubs shall be three-fourths (3/4) of the
United States Controlled Composition Mechanical Rate or the
Canadian Controlled Composition Mechanical Rate, as
applicable; if any particular Record (including, without
limitation, so-called "cassette Singles") embodies more than
one (1) of the same or different recordings of the same
Controlled Composition, then the United States Controlled
Composition Mechanical Rate or Canadian Controlled
Composition Mechanical Rate, as the case may be, shall be
payable only once on all
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reproductions of that Controlled Composition in that Record;
and no mechanical royalties shall be payable for the
reproduction of any Controlled Composition on a Phonograph
Record unless the timing of the Controlled Composition in
question as recorded in the Master embodied on that
Phonograph Record exceeds one (1) minute and thirty (30)
seconds in length;
(b) The term "Outside Selection" shall mean each Selection
which is not a Controlled Composition. You acknowledge that as an
element of your delivery to us of a Master, you are required to cause
the issuance to us of licenses to reproduce mechanically each Outside
Selection in all Phonograph Records sold in the United States or Canada
on the Required Terms. The term "Required Terms" shall mean mechanical
royalty rates and otherwise on terms that do not exceed the mechanical
royalty rates and that otherwise are no less favorable to us and our
designees than those provided in the standard mechanical licenses
issued by The Harry Fox Agency, Inc. or any successor for Phonograph
Records sold in the United States and by C.M.R.R.A or any successor for
Phonograph Records sold in Canada, except (i) the royalty rate for the
mechanical reproduction of Outside Selections on Phonograph Records
sold in the United States or Canada must not exceed the United States
Mechanical Rate or the Canadian Mechanical Rate above, as applicable,
and (ii) no royalties shall be payable for the mechanical reproduction
of Outside Selections on Phonograph Records sold in the United States
or Canada for which no Record royalties are payable under paragraph 9
above or otherwise. If for any reason you fail to cause the issuance to
us of a license for the mechanical reproduction of any Outside
Selection as and when required hereunder, we shall have the right, at
our election and without limiting our other rights or remedies in that
event, to negotiate and execute licenses for the mechanical
reproduction of each such Outside Selection on Phonograph Records
distributed in the United States or Canada on terms and conditions
which are determined solely by us or our designees. Solely for purposes
of subparagraph (e) below, those licenses so procured by us shall be
deemed to be on terms no less favorable to us or our designees than the
Required Terms. Nothing contained in this subparagraph amends or
modifies your obligation to deliver to us and our designees licenses
for the mechanical reproduction of all Selections recorded in the
Masters as a condition for the delivery to us of Masters or waives the
provisions of subparagraph 11(i) below;
(c) (i) Notwithstanding anything to the contrary
contained herein, for Net Sales in the United States, the
maximum aggregate mechanical royalty rate for all
Selections, including Controlled Compositions, contained on
a Phonograph Record, regardless of the number of Selections
contained thereon, shall be the product of (A) the United
States Controlled Composition Mechanical Rate and (B) ten
(10) for an Album, five (5) for an EP, and two (2) for a
Single and a Long-Play
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Single; and for Net Sales in Canada, the maximum aggregate
mechanical royalty rate for all Selections, including
Controlled Compositions, contained on a Phonograph Record,
regardless of the number of Selections contained thereon,
shall be the product of (A) the Canadian Controlled
Composition Mechanical Rate and (B) ten (10) for an Album,
five (5) for an EP, and two (2) for a Single and a Long-Play
Single;
(ii) Notwithstanding the foregoing, if we
release a Multiple Album embodying solely Masters hereunder,
then, solely with respect to that Multiple Album, the
maximum aggregate mechanical royalty rate for Net Sales of
that Multiple Album in the United States or Canada shall be
the otherwise applicable maximum set forth in subparagraph
11(c)(i) above for Net Sales of Albums in the United States
or Canada, as applicable, multiplied by a fraction, the
numerator of which is the Royalty Base Price of that
Multiple Album in the United States or Canada, as
applicable, and the denominator of which is the highest
Royalty Base Price of an Album which is not a Multiple Album
in the configuration or format in question released on our
top-line label in the United States or Canada, as
applicable, as of the date of our initial release through
normal retail distribution channels in the United States or
Canada, as applicable, of that Multiple Album; and
(iii) Notwithstanding anything to the contrary
contained herein, royalties for the mechanical reproduction
of any Selection in any Phonograph Record distributed in the
United States or Canada shall be payable only on Net Sales
of that Phonograph Record in question for which in a Record
royalty is payable hereunder pursuant to paragraph 9 above;
and
(d) We shall account for and pay royalties for the
mechanical reproduction of Controlled Compositions in accordance with
the provisions of subparagraphs (a), (d), (e), and (g) of paragraph 10
above, except that we shall send to you statements for those mechanical
royalties on or before May 31st for the quarter-annual period ending
the preceding March 31st, on or before August 31st for the
quarter-annual period ending the preceding June 30th, on or before
November 30th for the quarter-annual period ending the preceding
September 30th, and on or before the last day of February for the
quarter-annual period ending the preceding December 31st;
(e) If for any reason we are required to pay royalties for
the mechanical reproduction of any particular Selection (including a
Controlled Composition) or for the mechanical reproduction of all
Selections that are mechanically reproduced in a particular Phonograph
Record in excess of the applicable amounts fixed in subparagraphs (a),
(b) or (c) above, the royalties payable by us for the mechanical
reproduction of Controlled Compositions on
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Phonograph Records hereunder shall be reduced by an amount equal to
such excess. If that excess is greater than the amount of royalties
payable for the mechanical reproduction of Controlled Compositions on
the Phonograph Record in question, then upon our demand, you shall pay
to us an amount equal to the amount by which those excess mechanical
royalties exceed the royalties payable for the mechanical reproduction
of Controlled Compositions. In addition to all of our other rights and
remedies, we may deduct that amount of that excess from any and all
royalties or other monies payable to you under this Contract;
(f) Upon our request, you shall cause the issuance to us and
our designees of licenses to reproduce all Selections mechanically on
Phonograph Records hereunder distributed outside the United States and
Canada on terms no less favorable to us and our designees than those
generally applicable to Phonograph Record manufacturers in each country
in question. The obligation to account for and pay royalties for the
mechanical reproduction of Selections on sales of Phonograph Records
outside of the United States shall be that of our affiliates and
licensees;
(g) 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 us and our
designees the same rights as you are required to grant to us and our
designees pursuant to this paragraph 11;
(h) You hereby grant to us and our designees, at no fee,
royalty, or other cost to us or our designees, the irrevocable,
non-exclusive, worldwide right in perpetuity to reproduce and publicly
perform each Controlled Composition in Audio-Visual Recordings, to
distribute Audio-Visual Records embodying those Audio-Visual
Recordings, and otherwise to exploit in any manner and through any
media those Audio-Visual Recordings. You shall, upon our request, cause
the issuance to us and our designees, at no fee, royalty, or other cost
to us or our designees, the irrevocable, non-exclusive, worldwide right
in perpetuity to reproduce and publicly perform each Selection which is
not a Controlled Composition in Audio-Visual Recordings, to distribute
Audio-Visual Records embodying those Audio-Visual Recordings, and
otherwise to exploit in any manner or media those Audio-Visual
Recordings. If we or our designees shall pay any such fee, royalty, or
other cost, then you shall, upon our demand, pay us the amount thereof,
and we may, in addition to all of our other rights and remedies, deduct
that amount from any monies payable by us hereunder, including without
limitation, from those royalties payable pursuant to paragraph 9 above
in respect of the exploitation of AudioVisual Recordings in the United
States or Canada;
(i) Any assignment, license or other agreement made with
respect to Controlled Compositions shall be subject to the terms
hereof;
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(j) You grant to us and our designees the irrevocable right
throughout the world in perpetuity to (A) print and reproduce on the
packaging of Phonograph Records, at our election, the title and lyrics
to each Controlled Composition embodied in a Master and (B) digitally
encode in a Master or transmit together with the transmission of the
Master the title and/or lyrics to each Controlled Composition embodied
in a Master, all without payment to you or any other person, firm or
corporation of any monies or other consideration in connection
therewith. You also shall cause to be granted to us and our designees
the irrevocable right throughout the world in perpetuity to (A) print
and reproduce on the packaging of Phonograph Records embodying Masters,
at our election, the title and lyrics to each Selection embodied in a
Master that is not a Controlled Composition and (B) digitally encode in
a Master or transmit together with the transmission of the Master the
title and/or lyrics to each Selection embodied in the Master which is
not a Controlled Composition, all without payment to you or any other
person, firm or corporation of any monies or other consideration in
connection therewith. If we are required to pay any monies to any
person, firm or corporation for the printing, reproduction, encoding,
or transmission of the title or lyrics of any Selection recorded in a
Master as aforesaid, then you shall, upon our demand, pay to us an
amount equal to those monies paid by us in connection therewith and we
may, in addition to all of our other rights or remedies, deduct that
amount from any monies payable by us hereunder; and
(k) Notwithstanding anything to the contrary contained in
this Contract, we shall not recoup any advances or other charges
against royalties under this Contract from mechanical royalties payable
for Controlled Compositions on Net Sales of Records in the United
States or Canada, except: (i) pursuant to any provision hereof in which
we have the right to demand payment or reimbursement to us (such as,
but not limited to, our right pursuant to subparagraph 5(a) above to
demand payment for excess Recording Costs); (ii) to the extent provided
or permitted by the provisions of subparagraph 10(a) above in
connection with the overpayment to you of any monies hereunder, of this
paragraph 11; or (iii) pursuant to the indemnity provisions of
paragraph 19 below.
12. Audio-Visual Recordings.
(a) Upon our request, you shall appear for the making of
Audio-Visual Recordings embodying your performances on the following
terms:
(i) We shall designate the Musical Compositions which
shall be embodied in the Audio-Visual Recordings, the producer
and director of the Audio-Visual Recordings, all other
individuals rendering services in connection with the
production of the Audio-Visual Recordings, the storyboard and
script for the production of the Audio-Visual
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Recordings, and the locations at and the dates on which the
Audio-Visual Recordings shall be produced (collectively
referred to as "Audio-Visual Production Elements") or, at our
election (with your approval, which you shall not unreasonably
withhold), you shall designate and submit to us for our
approval one (1) or more Audio-Visual Production Elements;
(ii) We shall pay the Audio-Visual Production Costs of the
Audio-Visual Recordings in an amount not in excess of a budget
designated or approved by us in writing. "Audio-Visual
Production Costs" shall mean and include all minimum union
scale payments made to you in connection with the production of
the Audio-Visual Recordings, all payments which are made to any
other individuals rendering services in connection with the
production of the Audio-Visual Recordings, all other payments
which are made pursuant to any applicable law or regulation or
the provisions of any collective bargaining agreement between
us and any union or guild (including, without limitation,
payroll taxes and payments to union pension and welfare funds),
all amounts paid or incurred 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 you) rendering services
in connection with the production of the Audio-Visual
Recordings, together with all other amounts paid or incurred in
connection with the production and delivery to us of the
Audio-Visual Recordings. One hundred percent (100%) of the
Audio-Visual Production Costs shall be recoupable from
royalties payable under this Contract on the reproduction or
other exploitation of all Audio-Visual Recordings and
Audio-Visual Records. Only fifty percent (50%) of the aggregate
Audio-Visual Production Costs of each Audio-Visual Recording
shall be recoupable from royalties payable under this Contract
on the reproduction or other exploitation of Masters in
Phonograph Records reproducing sound alone; moreover, only
fiftypercent (50%) of the cost of producing so-called
"electronic press kits" shall be recoupable from your royalties
hereunder;
(iii) The Audio-Visual Recordings shall be produced in
accordance with the rules and regulations of all labor unions
and guilds having jurisdiction over the production thereof;
(iv) You shall cooperate with us and our designees fully
and to perform to the best of your ability in connection with
the production of the Audio-Visual Recordings; and
(v) If the Audio-Visual Production Costs exceed the
budget approved by us in writing, unless as a result of a cause
solely within our control, you shall be solely responsible for
and shall promptly
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pay that excess. If, however, we pay any excess Audio-Visual
Production Costs, you shall pay to us, upon our demand, an
amount equal to that excess. If for any reason you delay the
commencement of or are not available for any scheduled
appearance by you relating to the production of the
Audio-Visual Recordings, you shall pay to us, upon our demand,
an amount equal to the expenses or charges paid or incurred by
us by reason thereof. Notwithstanding anything to the contrary
contained herein, without limiting our other rights and
remedies, we may deduct the foregoing amounts from any monies
payable by us hereunder;
(b) Our rights in the Audio-Visual Recordings and our rights
to use your name and the name, likeness, and other identification and
biographical material concerning you are set forth in paragraphs 6 and
7 hereof, wherein the terms "Master Recordings" and "Phonograph
Records" include Audio-Visual Recordings and Audio-Visual Records,
respectively; and
(c) Audio-Visual Recordings shall not apply in fulfillment
of your Recording Commitment. We shall have no obligation, except as
expressly otherwise provided in this paragraph 12, to pay to you any
monies in connection with the production of Audio-Visual Recordings.
13. Warranties, Representations and Covenants. You hereby
warrant, represent, covenant and agree as follows:
(a) You have the right and power to enter into this
Contract, to grant the rights granted by you to us hereunder, and to
perform all of the terms hereof. Without limiting the generality of the
foregoing, no Musical Composition, other Selection or any other
material recorded by you shall be subject to any re-recording or other
restrictions;
(b) During the Term, you shall become and remain members in
good standing of any labor union or guilds with which we may at any
time have an agreement lawfully requiring your membership;
(c) All recording sessions for the Masters shall be
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;
(d) None of the following will violate or infringe upon the
rights of any person, firm or corporation, including, without
limitation, contractual rights, copyrights, rights of publicity and
rights of privacy: any name or other identification used by you; any
Controlled Compositions; any other Selections; and any materials,
ideas, or other properties furnished or designated by you and
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embodied or contained in or used in connection with the Masters or the
packaging of or the advertising for the Phonograph Records embodying
the Masters;
(e) All recordings embodying your performances heretofore
have been released commercially in the United States on Phonograph
Records;
(f) You shall not 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;
(g) Except as otherwise specifically provided herein, we
shall have no obligation hereunder or otherwise to pay any person,
firm, or corporation any amounts in connection with the exercise of any
of our rights hereunder, including, without limitation, our rights with
respect to the recording or exploitation of Master Recordings; and
(h) Without limiting the generality of anything
contained in the foregoing, you shall neither authorize the production
of, nor shall you produce for or deliver to us, any Master for which
the recording method known as "sampling" shall have been utilized to
record in that Master any sound or material created, owned or
controlled by any third party.
14. Recording Restrictions.
(a) During the Term, you shall not enter into any agreement
or make any commitment which would interfere with your performance of
any of the terms hereof. Further, during the Term, you shall not
perform for or render services in connection with the recording of any
Master Recordings for use or reproduction in Phonograph Records by any
person, firm, or corporation other than us. After the Term, you shall
not perform prior to the Restriction Date for any person, firm or
corporation other than us, for the purpose of making Phonograph Records
or Master Recordings, any Selection recorded hereunder or under any
other agreement between you and us or our affiliates. The term
"Restriction Date" shall mean the later of (i) the date five (5) years
subsequent to the last date on which a Master Recording embodying that
Selection was delivered to us and (ii) the date two (2) years
subsequent to the date on which the Term ended; and
(b) You shall not at any time manufacture, distribute, or
sell or authorize the manufacture, distribution, or sale by any person,
firm, or corporation other than us of Phonograph Records embodying (i)
any performance rendered by you during the Term or (ii) any performance
rendered
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by you after the Term of a Selection recorded hereunder if that
performance shall have been rendered prior to the Restriction Date
applicable to that Selection. Furthermore, you shall not 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 us of Phonograph Records embodying that
performance. Specifically, but without limiting the generality of the
foregoing, if during the Term you perform any Selection or if after the
Term you perform any Selection prior to the Restriction Date applicable
thereto, you will not 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 our request, you shall promptly deliver to us a copy of
the pertinent provisions of each such contract and you shall cooperate
fully and reasonably with us in any controversy which may arise or
litigation which may be instituted relating to our rights pursuant to
this paragraph.
15. Unique Services. You expressly acknowledge that your
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 of any term hereof, we will be caused irreparable injury which cannot
adequately be compensated by money damages. Accordingly, we shall be entitled to
injunctive relief, in addition to any other rights or remedies which we may
have, to enforce the terms of this Contract.
16. Certain Remedies.
(a) We may, at our election, suspend the running of the Term
and our obligations hereunder upon written notice to you (i) if for any
reason whatsoever your voice or ability to perform as an
instrumentalist shall become materially impaired, (ii) if you shall
refuse, neglect, fail, or be unable to fulfill any of your obligations
hereunder, or (iii) if as a result of an Act of God, accident, fire,
labor controversy, riot, civil commotion, act of public enemy, law,
enactment, rule, order, or act of any government or governmental
instrumentality, failure of technical facilities, failure or delay of
transportation facilities, illness or incapacity of you, or others, or
other cause of a similar or dissimilar nature not reasonably within our
control, we are hampered in the recording, manufacture, distribution,
or sale of Phonograph Records or our normal business operations become
commercially impractical. A suspension shall be for the duration of any
such event or contingency, and, unless we notify you to the contrary in
writing, the Contract Period during which that event or contingency
shall have commenced shall be automatically extended by a number of
days equal to the total number of days of the suspension, or such fewer
number of days of which we may advise you in writing. If any period of
suspension arising from events other than (i) the impairment of your
voice or ability to perform as an instrumentalist, (ii) your
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refusal, neglect, failure, or inability to fulfill any of your
obligations hereunder, or (iii) any other event affecting a substantial
portion of the United States recording industry, shall exceed six (6)
consecutive months in duration, you may give to us notice at any time
during the continuation of that period of suspension after the date six
(6) months after its commencement, of your desire that we discontinue
such period of suspension and that the Term be terminated if we fail to
do so ("Termination Request"). If we shall fail to give to you notice
of our discontinuance of that period of suspension within ten (10)
business days after our receipt of your Termination Request, the Term
shall expire and we shall have no obligations or liabilities to you
hereunder, except for our obligations with respect to Masters delivered
hereunder prior to that termination, if any. Notwithstanding the
foregoing, a suspension of the Term pursuant to this subparagraph 16(a)
shall not suspend our royalty accounting and payment obligations
hereunder unless the event causing that suspension materially affects
our ability to make payments or render statements. No suspension shall
in any manner suspend or otherwise impair our rights under this
Contract;
(b) If your voice or ability to perform as an
instrumentalist shall become impaired or if you shall refuse, neglect,
fail, or be unable to fulfill any of your obligations hereunder,
including, without limitation, your obligation to record for and
deliver to us Masters within the time periods set forth in paragraph 3
above, we may, without limiting our other rights or remedies, terminate
the Term upon written notice to you, in which event we shall have no
obligations or liabilities to you under this Contract, except for our
obligations, if any, with respect to Masters recorded prior to that
termination. If we so terminate the Term, you shall pay us, on demand,
an amount equal to any unrecouped advances hereunder, other than any
advances attributable to and paid in respect of a Required Album
theretofore delivered by you to us; and
(c) In addition to our other rights hereunder, we shall have
the right, at our election and for any reason, with or without cause,
to terminate the Term at any time by written notice to you.
Additionally, we shall have the right, at our election, with or without
cause, to refuse to permit you to fulfill your then-current Recording
Commitment for any Contract Period including, without limitation, by
discontinuing recording sessions for any Masters and ceasing the
payment of Recording Costs for any Masters. If we refuse to permit you
to fulfill your minimum Recording Commitment for any Contract Period,
other than as a result of an event or contingency referred to in
subparagraph 17(a) above, we shall have no obligations or liabilities
to you in connection therewith unless within forty five (45) days after
our refusal you shall notify us of your desire to fulfill your minimum
Recording Commitment for that Contract Period and within thirty (30)
days after our receipt of that notice we shall fail to advise you in
writing that we shall permit you to fulfill your minimum Recording
Commitment for that Contract Period. If we shall fail to so advise you
in writing that we shall permit you to fulfill your minimum Recording
Commitment for that Contract Period, the Term shall
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expire as of the end of that thirty (30) day period and we shall have
no obligations or liabilities to you whatsoever in connection with our
failure to permit you to fulfill your Recording Commitment for that
Contract Period. We shall, however, pay to you promptly after the
expiration of that thirty (30) day period, as an advance recoupable
from royalties hereunder or under any other agreement between you and
us or our affiliates, an amount equal to the minimum union scale
payments which would have been required to have been paid to you for
each Required Album for that Contract Period that we did not permit you
to record. For the purposes of the foregoing, an Album shall be deemed
to be comprised of eight (8) Masters.
17. Producer and Other Royalties.
(a) You shall cause any and all producers of the Masters to
execute a Producer Declaration in the form attached hereto as Exhibit A
prior to the commencement of recording sessions for any Masters
hereunder. Without limiting the generality of anything set forth in
paragraph 4 above, no recording sessions shall be commenced nor shall
we have any obligation to pay to you any advances for the Masters
pursuant to paragraph 8 above unless and until you shall have entered
into a binding agreement with any and all producers of the applicable
Masters and we shall have received an executed Producer Declaration
from any and all producers of the applicable Masters;
(b) 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 producers or directors of Audio-Visual
Recordings or to any others rendering services in connection with the
recording of the Masters and the production of Audio-Visual Recordings
or otherwise entitled to compensation in respect of the exploitation of
Masters or Audio-Visual Recordings; and
(c) We may, but shall not be obligated to, enter into an
agreement with any producers of the Masters or any producer or director
of any Audio-Visual Recordings which provides for the payment by us,
rather than you, of royalties or other compensation payable to any such
producer or director; provided, however, that any such agreement shall
contain standard terms and conditions and we shall consult with you
prior to our entering into any such producer agreement, provided you
are reasonably personally available therefor. We shall consider in good
faith your recommendations with respect to such agreements, provided,
however, that our decisions with respect thereto shall be final and our
failure to so consult with you in accordance with this subparagraph
17(c) shall not constitute a breach of the Contract. We may deduct any
amounts payable by us to those producers or directors of Masters or
Audio-Visual Recordings from any monies payable by us hereunder.
Furthermore, for the purposes of the recoupment of any advances or
charges under this Contract, the royalty rates contained in paragraph 9
with respect to those Masters and
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Audio-Visual Recordings shall be deemed reduced by the amount of the
applicable royalty rates with respect to Masters and Audio-Visual
Recordings payable by us to any such producers or directors. Any
advances payable by us to those producers or directors which are not
recouped by us from royalties payable to those producers or directors
may be recouped by us from any royalties or other sums payable by us
hereunder.
18. Definitions.
(a) The term "Album" shall mean a twelve (12) inch
thirty-three and a third (33-1/3) rpm long-playing vinyl-disc
Phonograph Record of no fewer than forty-five (45) minutes in playing
time or its cassette tape or other equivalent or substantial equivalent
in any form or configuration, and, where the context requires, Masters
sufficient to constitute a twelve (12) inch thirty-three and a third
(33-1/3) long-playing vinyl-disc Phonograph Record of no fewer than
forty-five (45) minutes in playing time or its tape or other equivalent
or substantial equivalent in any form or configuration. The maximum
playing time of an Album shall not exceed the maximum number of minutes
capable of being reproduced pursuant to the technological
specifications of the format or configuration concerned, which shall be
designated by us in our reasonable good faith discretion;
(b) The term "Audio-Visual Record" shall mean a Phonograph
Record embodying visual images;
(c) The term "Audio-Visual Recording" shall mean a Master
Recording embodying visual images;
(d) (i) The term "Budget Audio-Visual Record" shall mean an
Audio-Visual Record which bears a Royalty Base Price in the country in
question which is sixty-six and two-thirds (66-2/3%) percent or less of
the Royalty Base Price in that country of top-line Audio-Visual Records
on which recordings of the majority of our artists are initially
released in that country;
(ii) The term "Budget Record" shall mean a Phonograph
Record which bears a Royalty Base Price in the country in
question which is sixty-six and two-thirds (66-2/3%) percent
or less of the Royalty Base Price in that country of top-line
Phonograph Records on which recordings of the majority of our
artists are initially released in that country;
(e) The term "Compact Disc" shall mean a Digital Record in
any configuration (e.g., Album, Single, EP) in disc form primarily
reproducing sound (but not together with visual images), the signals of
which are read and transmitted from that disc by means of laser;
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(f) The term "Controlled Composition" shall mean a Musical
Composition or other Selection, written or composed by you, in whole or
in part, 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 an indirect
interest;
(g) The terms "Conventional Phonograph Record,"
"Conventional cassette tapes," "Conventional vinyl discs" and
"Conventional Album" shall refer to black vinyl discs or analog tape
cassettes of customary quality;
(h) The term "Digital Records" shall mean Records in any
configuration (e.g., Album, Single, EP), the signals of which are
encoded and decoded by digital technology, whether now known or
hereafter devised, as opposed to analog technology, and shall include,
without limitation, Compact Discs, digital audio tapes, mini discs and
digital compact cassettes. Notwithstanding the foregoing, the term
"Digital Records" shall not mean a Record exploited by means of direct
transmission (whether digital or otherwise) via satellite, cable or
other direct transmission to the consumer over wire or through the air,
which shall constitute a New Record hereunder for all purposes;
(i) The term "delivery to us" or words of similar
connotation used in connection with Master Recordings or Masters shall
mean delivery to our Production Manager at our offices in New York, New
York of all of the following: a two-track sequenced, equalized,
fully-mixed and mastered digital audio tape and/or U-matic 1630 tape in
proper form for the production of the parts necessary to manufacture
Phonograph Records therefrom and all consents, approvals, copy
information, credits, mechanical licenses for all Selections recorded
in those Master Recordings or Masters and other material and documents
required by us to release Phonograph Records embodying those Master
Recordings or Masters and to manufacture album covers or other
packaging therefor (including, without limitation, Artwork). Our
election to pay to you any monies which were otherwise required to have
been paid upon or promptly after your delivery to us of Masters or our
election to release any Phonograph Record derived from any Master shall
not be deemed to be an acknowledgment by us that delivery to us of that
Master or Masters has been completed in accordance with the provisions
of this subparagraph (i). Further, in either event, we shall not be
deemed to have waived our right to require your complete and proper
performance thereafter of your obligation to deliver to us any Masters
or any of our remedies for your failure to do so in accordance with the
provisions hereof;
(j) The term "EP" shall mean a twelve (12) inch thirty-three
and a third (33-1/3) rpm or forty-five (45) rpm vinyl-disc Phonograph
Record, or its cassette tape or other equivalent or substantial
equivalent in any form or
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configuration, embodying no fewer than four (4) Musical Compositions
and no more than seven (7) Musical Compositions;
(k) The term "Long-Play Single" shall mean a twelve (12)
inch thirty-three and a third (33-1/3) rpm or forty-five (45) rpm
vinyl-disc Phonograph Record, or its cassette tape equivalent or other
equivalent or substantial equivalent in any form or configuration,
embodying one (1) or more recordings of no more than three (3)
different Musical Compositions;
(1) The term "Master Recording" shall mean every form of
recording (whether now known or unknown), embodying sound alone, or
sound accompanied by visual images, which may be used in the recording,
production, or manufacture of Phonograph Records;
(m) The term "Master" shall mean a Master Recording
embodying your performances recorded during the Term;
(n) (i) The term "Mid-Price Audio-Visual Record" shall mean
an Audio-Visual Record bearing a Royalty Base Price in the
country in question in excess of sixty-six and two-thirds
(66-2/3%) percent and less than eighty (80%) percent of the
Royalty Base Price in that country of top-line Audio-Visual
Records on which recordings of the majority of our artists are
initially released in that country;
(ii) The term "Mid-Price Record" shall mean a Phonograph
Record bearing a Royalty Base Price in the country in question in
excess of sixty-six and two-thirds (66-2/3%) percent and less
than eighty (80%) percent of the Royalty Base Price in that
country of top-line Phonograph Records on which recordings of the
majority of our artists are initially released in that country;
(o) The term "Multiple Album" shall mean a single package
containing two (2) or more Albums, or their cassette tape or other
equivalent or substantial equivalent in any form or configuration,
which is sold as a single unit, and, where the context requires, Master
Recordings sufficient to constitute a single package containing two (2)
or more Albums, or their tape or other equivalent or substantial
equivalent in any form or configuration, which is sold as a single
unit;
(p) The terms "Musical Composition" and "Composition" shall
mean a single musical composition and, for the purposes of computing
mechanical royalties hereunder, shall include a medley;
(q) (i) With respect to Masters other than Audio-Visual
Recordings, the term "Net Receipts" shall mean the flat-fee, if
specifically
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attributable solely to one (1) or more Masters, or the royalty,
as the case may be, received by us from a person, firm or
corporation from the exploitation by that person, firm or
corporation of rights in those Masters, less all costs paid or
incurred by us in connection with the exploitation of those
rights and the collection of those monies, less all taxes and
adjustments and less all royalties or other sums payable by us to
any person, firm or corporation in connection with the
exploitation of those rights, including, without limitation,
royalties for the mechanical reproduction of the Selections
embodied in those Masters, but excluding royalties or other sums
payable to producers of those Masters, which shall be borne
solely by you; and
(ii) With respect to Audio-Visual Recordings, the term
"Net Receipts" shall mean an amount equal to the flat-fee, if
specifically attributable solely to one (1) or more Audio-Visual
Recordings, or the royalty, as the case may be, received by us
from a person, firm or corporation from the exploitation by that
person, firm or corporation of rights in those Audio-Visual
Recordings, less twenty percent (20%) of those monies as a
distribution fee, less all costs paid or incurred by us in
connection with the exploitation of those rights and the
collection of those monies and less all taxes and adjustments and
less all royalties or other sums payable by us to any person,
firm or corporation in connection with the exploitation of those
rights, including, without limitation, royalties for the
mechanical reproduction of the Selections embodied in those
Audio-Visual Recordings, but excluding royalties or other sums
payable to producers of the Masters embodied in those
Audio-Visual Recordings and producers or directors of those
Audio-Visual Recordings, which shall be borne solely by you;
(r) The term "Net Sales" shall mean ninety-percent (90%) of
gross sales for which final payment has been received by us in United
States Dollars in the United States, after deducting from gross sales
returns, credits, and reserves against anticipated returns and credits;
(s) The term "Net Sales through Normal Retail Distribution
Channels" shall mean Net Sales of Phonograph Records hereunder through
our principal distributor in the country in question for resale through
record or other retail stores for which a Record royalty is payable
hereunder after the retention of reserves (and, without limiting the
generality of the foregoing, shall exclude sales or distributions
referred to in paragraph 9(b) above);
(t) The term "New Record" shall mean a Phonograph Record in
any software medium in which recorded music is not in general
commercial distribution in the United States as of January 1, 1997,
including, without limitation, the sale of Phonograph Records (or other
exploitation of Masters)
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through the telephone, satellite, cable or other direct transmissions
to the consumer over wire or through the air (as distinguished from
radio or television advertised sales of Phonograph Records described in
subparagraph 9(b)(i) above);
(u) 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, other pre-recorded
tapes, or any digital copy, including, without limitation, so-called
"temporary copy";
(v) The term "Royalty Base Price" shall mean the following
amounts for the following Phonograph Records:
(i) (A) With respect to Phonograph Records (other than
Audio-Visual Records) sold in the United States or Canada, the
SRLP except as set forth below; and
(B) With respect to royalties payable on Net Sales
of Phonograph Records in the United States or Canada for which
the Royalty Base Price is the SRLP, we shall have the right, at
any time, at our election, to calculate royalties hereunder on
the basis of our principal distributor's price (before
consideration of any discounts resulting from the distribution
of free goods), from time to time, to its customers in the
United States of Phonograph Records, in lieu of the SRLP of
those Phonograph Records, multiplied by an "uplift." As used in
the immediately-preceding sentence, the term "our principal
distributors price" shall mean the lowest wholesale price paid
by the largest category of customers to our principal
distributor in the United States during the relevant
semi-annual accounting period. If we elect to do so, then we
shall calculate that "uplift" as a fraction, the numerator of
which is the SRLP of a Comparable Phonograph Record immediately
prior to our discontinuance of retail-based calculations and
the denominator of which is our principal distributor's price
(before consideration of any discounts resulting from the
distribution of free goods) to its customers in the United
States of a Comparable Phonograph Record immediately prior to
our discontinuance of retail-based calculations. The
application of the foregoing provisions of this subparagraph
shall not result in a reduction in the amount of royalties
otherwise payable to you hereunder on a
configuration-by-configuration basis immediately prior to our
discontinuance of retail-based calculations. For purposes of
this subparagraph, the term
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"Comparable Phonograph Record" shall mean a Phonograph Record
of the same configuration, with the same packaging, and in the
same price category as the Phonograph Record in question; and
(ii) With respect to Phonograph Records (other than
Audio-Visual Records) sold outside of the United States and
Canada:
(A) If an SRLP is established or utilized by our
licensee (whether or not affiliated with us) in a
particular country in accounting to us, then that
particular SRLP established or utilized by our licensees
shall apply to Phonograph Records hereunder;
(B) If an SRLP is not established or utilized by
our licensee (whether or not affiliated with us) in a
particular country in accounting to us on sales of
Phonograph Records, then, at our election, (1) the price
upon which mechanical royalties are generally computed and
paid by major record companies (including, without
limitation, our then-current principal distributor) in the
country in question pursuant to the then-current agreement
between major record companies and the mechanical
reproduction rights society in that country or (2) an
amount computed by multiplying the lesser of (aa) that
percentage utilized by our affiliate or licensee in
computing a retail related price or constructed price on
which royalties are paid to us and (bb) one hundred
twenty-six percent (126%), by the lowest of (aa) the
so-called "published price to dealers," (bb) the lowest
wholesale price paid to our or our affiliate's or
licensee's principal distributor in the country in
question by the largest category of customers during the
relevant semiannual accounting period and (cc) the
wholesale price which our licensee (whether or not
affiliated with us) in a particular country uses in
accounting to us for royalties.
(iii) With respect to Audio-Visual Records sold in any
country of the world, an amount equal to the monies actually
received by us in the United States (or credited to us in final
reduction of an advance previously received by us in the United
States) from the sale of those Audio-Visual Records (rather
than their actual SRLP, wholesale price, published price to
dealers or any other price), after deduction of a distribution
fee of twenty percent (20%) of those monies; and
(iv) There shall be deducted from the Royalty Base Price
an amount equal to any excise, sales, value added or comparable
or similar taxes which are included therein;
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(w) The term "Selection" shall mean a Musical Composition,
poem, dramatic work, comedy routine, or other verbal expression;
(x) The term "Single" shall mean a seven (7) inch vinyl-disc
Phonograph Record or its tape or other equivalent or substantial
equivalent in any form or configuration; and
(y) Except as otherwise herein provided, the term "SRLP"
shall mean those suggested retail list prices established by us or our
affiliates or licensees from time to time for Phonograph Records in a
particular configuration which shall be determined from time to time
with reference to the relevant wholesale price in a manner that shall
be applied consistently to a majority of our (or our licensees' or
affiliates') then-current recording artists. With respect to New
Records that are distributed by telephone, satellite, cable or other
direct transmissions over wire or through the air, the term "SRLP"
shall mean either those suggested retail list prices therefor, if any,
established by us or our affiliates in accordance with the terms of the
preceding sentence or those retail list prices charged to the ultimate
consumer therefor, excluding any shipping and handling charges in
connection therewith.
19. Indemnity. You hereby indemnify, save, and hold us harmless
from any and all damages, liabilities, costs, losses and expenses (including
legal costs and attorneys' fees) arising out of or connected with any claim,
demand or action by us or by a third party which is inconsistent with any of the
warranties, representations or covenants made by you in this Contract. You shall
reimburse us, on demand, for any payment made by us 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, we may
withhold, at our election, payment of any monies otherwise payable to you
hereunder or under any other agreement between you and us or our affiliates in
an amount which does not exceed your potential liability to us pursuant to this
paragraph.
20. Assignment. We shall have the right, at our election and
with your approval (which you shall not unreasonably withhold), to assign this
Contract or any of our rights hereunder, in whole or in part, or to delegate any
of our obligations hereunder, in whole or in part, to any person, firm or
corporation. You shall not have the right to assign this Contract or any of your
rights or to delegate any of your obligations hereunder.
21. Notices. 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 us hereunder
shall be addressed to us at the address set forth on page 1 hereof or at such
other address as we shall designate in writing from time to time. All notices
shall be in writing and shall either be
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served by personal delivery, certified mail, return receipt requested, or
facsimile transmission (with a copy sent concurrently by certified mail, return
receipt requested), all charges prepaid, except that statements and payments may
be sent by regular mail. Notices to us must be sent to the attention of our
Senior Vice President, Business & Legal Affairs. Except as otherwise provided
herein, notices shall be deemed given when personally delivered, mailed as
aforesaid, or transmitted by facsimile (with a concurrent copy mailed as
aforesaid), all charges prepaid, except that notices of change of address shall
be effective only after actual receipt. A copy of each notice to us shall be
sent simultaneously to Mitchell, Silberberg & Knupp LLP, 11377 West Olympic
Boulevard, Los Angeles, California 90064, to the attention of J. Eugene Salomon,
Jr., Esq.
22. Miscellaneous.
(a) This Contract sets forth your and our entire
understanding relating to its subject matter. No modification,
amendment, waiver, termination or discharge of this Contract or any of
its terms shall be binding upon either of us unless confirmed by a
document signed by you and by a duly authorized officer of ours. No
waiver by you or us of any term of this Contract or of any default
hereunder shall affect your or our 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) (i) We shall not be deemed to be in breach of any of our
obligations hereunder unless and until you shall have given us
specific written notice by certified or registered mail, return
receipt requested, describing in detail the breach and we shall
have failed to cure that breach within thirty (30) days after our
receipt of that written notice; and
(ii) Except with respect to any breach by you relating
to your recording of any Selection prior to the Restriction Date
applicable thereto, the delivery of Albums hereunder in
accordance with all the terms and provisions hereof and any of
the exclusive rights granted to us hereunder, you shall not be
deemed to be in breach of any of your obligations hereunder
unless and until we shall have given you specific written notice
by certified or registered mail, return receipt requested,
describing in detail that breach, and you shall have failed to
cure that breach within thirty (30) days after your receipt of
that written notice. Nothing contained in this subparagraph
22(b)(ii) shall limit our rights to seek injunctive relief
hereunder;
(c) Our payment obligations under this Contract are
conditioned upon your full and faithful performance of the terms
hereof;
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(d) Wherever your approval or consent is required hereunder,
that approval or consent shall not be unreasonably withheld. We may
require you to formally give or withhold approval or consent by giving
you notice of our 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 us written notice of your approval or
disapproval or of your consent or non-consent within five (5) days
after our notice is sent and in the event of your disapproval or
nonconsent your notice shall contain the specific reasons therefor.
Your failure to give us notice as aforesaid shall be deemed to be
consent or approval, as the case may be, with respect to the matter
submitted;
(e) Nothing herein contained shall constitute a partnership,
joint venture, or fiduciary relationship between you and us. Except as
otherwise expressly provided herein, you are performing your
obligations hereunder as independent contractors. Neither party hereto
shall hold itself out contrary to the terms of this subparagraph 22(e)
and neither you nor we shall become liable for any representation, act
or omission of the other contrary to the provisions hereof;
(f) This Contract shall not be deemed to give any right or
remedy to any third party whatsoever unless that right or remedy is
specifically granted by us in writing to that third party;
(g) The provisions of any applicable collective bargaining
agreement between us and any labor union or guild which are required by
the terms of that agreement to be included in this Contract shall be
deemed incorporated herein as if those provisions were expressly set
forth in this Contract;
(h) In the event of any action, suit, or proceeding arising
from or based upon this Contract brought by either party hereto against
the other, the prevailing party shall be entitled to recover from the
other its attorneys' fees in connection therewith in addition to the
costs of that action, suit, or proceeding;
(i) 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;
(j) THIS CONTRACT HAS BEEN ENTERED INTO IN THE STATE OF NEW
YORK AND ITS VALIDITY, CONSTRUCTION, INTERPRETATION AND LEGAL EFFECT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW
YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES UNDER
NEW YORK LAW). THE VENUE FOR ANY ACTION, SUIT OR PROCEEDING ARISING
FROM OR BASED UPON THIS CONTRACT
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SHALL BE THE APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY
OF NEW YORK IN THE STATE OF NEW YORK. ACCORDINGLY, YOU AND WE AGREE
THAT ANY ACTION, SUIT OR PROCEEDING ARISING FROM OR BASED UPON THIS
CONTRACT SHALL BE COMMENCED IN AND DETERMINED BY THOSE APPROPRIATE
STATES AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK IN THE
STATE OF NEW YORK. IN CONNECTION WITH THE FOREGOING, YOU AND WE EACH
AGREE TO SUBMIT TO AND BE BOUND BY THE JURISDICTION OF THE APPROPRIATE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK IN THE STATE
OF NEW YORK;
(k) This Contract shall not become effective until signed by
you and countersigned by a duly authorized officer of ours;
(l) The paragraph headings herein are solely for the purpose
of convenience and shall be disregarded completely in the
interpretation of this Contract or any of its terms;
(m) We may at any time during the Term obtain, at our cost,
insurance on you. We or our designees shall be the sole beneficiary of
that insurance and neither you, nor any person, firm or corporation
claiming rights through or from you shall have any rights in that
insurance. You shall submit to such physical examinations and to
complete and deliver such forms as we may reasonably require and
otherwise to cooperate with us fully for the purpose of enabling us to
secure that insurance;
(n) Upon our request, you shall render your services at such
times and places as we may reasonably designate for the purpose of
assisting us in the marketing, advertising and promotion of Phonograph
Records hereunder. Among those services are engaging in interviews,
participating in press conferences, posing at photography sessions and
appearing on television and radio shows. Promptly after your submission
to us of invoices or other suitable documentation therefor, we shall
pay to you or reimburse you for the reasonable costs of travel and
accommodations which are actually paid or incurred by you in connection
with your services under this subparagraph 22(n), but you shall not pay
or incur any costs or expenses in connection with your services under
this subparagraph 22(n) which are to be paid or reimbursed by us unless
you and we mutually agree in writing on the nature and extent of those
costs and expenses. If we pay or incur any costs in connection with
your services pursuant to this subparagraph 22(n) ("Promotional
Services Costs"), those Promotional Services Costs shall not be
recoupable from royalties earned by you hereunder. If, however, any
third party pays to you any fee or other consideration for or in
connection with your services pursuant to this subparagraph 22(n) (such
as, but not limited to, a television appearance fee) and
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we pay or incur any Promotional Services Costs in connection therewith,
then you shall pay to us all such fees and other consideration to the
extent of our Promotional Services Costs in connection therewith. If
you fail for any reason to pay to us those fees to the extent of our
Promotional Services Costs, then, at our election, the amount of all
such fees received by you from third parties in connection with you
services pursuant to this subparagraph 22(n) in an amount equal to our
Promotional Services Costs shall be deemed to be advances recoupable
from any and all monies payable to you pursuant to this Contract;
(o) You shall not render any services to or authorize or
permit your name or likeness or any biographical material concerning
you to be used in any manner by any person, firm or corporation in the
advertising, promoting or marketing of blank magnetic recording tape,
digital audio tape or any other product or device intended to be sold,
whether now known or hereafter developed, which may be used for the
fixation of sound alone or sound together with visual images;
(p) You acknowledge and agree that you have been represented
by independent legal counsel or have had the unrestricted opportunity
to be represented by independent legal counsel of your own choice for
purposes of advising you in connection with the negotiation and
execution of this Contract. Additionally, you acknowledge and agree
that either you or your independent legal counsel have had the
opportunity to investigate and inquire about all of the relevant facts
and circumstances in connection with your entering into and executing
this Contract. If you have not been represented by independent legal
counsel of your own choice for purposes of advising you in connection
with the negotiation and execution of this Contract, you acknowledge
and agree that your failure to be represented by independent legal
counsel in connection with your negotiation and execution of this
Contract was determined solely by you, without any interference by us
or any person, firm or corporation related to us;
(q) The provisions of the Immigration Reform and Control Act
("IRCA") are mandatory. You agree to complete the Immigration and
Naturalization Service Form I-9 ("Employment Eligibility Verification
Form") no later than concurrently with your execution of this Contract.
You expressly acknowledge and agree that any and all payments to or on
behalf of you under this Contract are conditioned upon your delivery to
us of a completed Employment Eligibility Verification Form. This
provision shall not in any way modify or alter the fact that you are
performing your obligations hereunder as an independent contractor,
except as otherwise expressly provided in this Contract;
(r) Nothing contained in the Contract or otherwise shall be
deemed to authorize or permit you to pay or incur (and you shall not
pay or incur)
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any cost or expenses without our prior written consent, which consent
we may withhold in our sole discretion; and
(s) Unless otherwise specified herein or unless the context
otherwise clearly requires, the masculine gender used herein includes
the feminine and neuter genders, and the grammatically plural form of
any term defined in the singular form hereunder shall also be the
plural form of such defined term, and the grammatically singular form
of any term defined in the plural form hereunder shall also be the
singular form of such defined term.
23. Sampling and Sampled Master. The following terms have the
following meanings: The term "Sampling" refers to the use and reproduction of
pre-existing music material in a Master Recording intended to be a "Master"; the
term "Other Material" refers to the pre-existing musical material which is used
or embodied in a Master Recording intended to be a "Master"; and the term
"Sampled Master" refers to a Master Recording which is delivered to us as a
"Master" subject to this Contract embodying Other Material. You warrant,
represent, covenant and agree as follows: concurrently with your delivery to us
of any Master Recording as a "Master" subject to this Contract, you shall notify
us in writing of any Sampling of Other Material in that Master Recording, and
you shall notify us in writing of the names and addresses of the recording
artist(s), recording companies, songwriters and publishers who have any right,
title or interest in and to the Other Material embodied in that Master Recording
intended to be delivered to us as a "Master" subject to this Contract as a
result of that Sampling; no Sampled Master shall violate or infringe on the
rights of any other person, firm or corporation, including, without limitation,
the copyrights owned or controlled by any other person, firm or corporation; as
between you, on the one part, and us, on the other part, you shall be solely
responsible for and shall account for and pay to the persons, firms or
corporations that own or control Other Material all monies to which those other
person, firms or corporations are entitled to as a result of the Sampling of any
Other Material in Sampled Masters subject to this Contract; and, as between you
and us, you shall be solely responsible for obtaining all consents and licenses
44
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necessary or desirable in connection with the use and reproduction and licensing
the use and reproduction of Other Material in Sampled Masters. No royalties,
advances or other money shall be earned by or payable to you hereunder in
connection with any Sampled Master and no Sampled Masters shall be deemed to be
delivered to us in fulfillment of your Recording Commitment unless and until we
obtain documentation reasonably satisfactory to us of the foregoing.
If the foregoing correctly reflects your agreement with us,
please so indicate by signing below.
Very truly yours,
WALL STREET RECORDS LLC
By: /s/ xxxxxxxxxxxxxx
---------------------
By: /s/ xxxxxxxxxxxxxx
---------------------
AGREED AND ACCEPTED:
/s/ Ricardo E. Brown
- -----------------------------------------
Ricardo Emanuel Brown Jr., p/k/a "Kurupt"
Birth Date:______________________________
Soc. Sec. No.:___________________________
Union Affiliations:______________________
45
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EXHIBIT A
PRODUCER DECLARATION
I, the undersigned, declare that I have read and understand
those relevant portions of the agreement between Wall Street Records LLC ("Wall
Street") c/o A&M Records, Inc., Worldwide Plaza, 825 8th Avenue, New York, New
York, 10019 and Ricardo Emanuel Brown, Jr. (professionally known as "Kurupt"
and referred to below as "Artist") dated as of March 13, 1998 ("Artist
Agreement") that pertain to my record production endeavors.
I hereby certify that I have produced or will have produced
certain master recordings embodying Artists featured performance ("Masters")
pursuant to an agreement between Artist and me ("Producer Agreement") which
provides for valuable consideration to be paid to me. As part of my material
obligations pursuant to the Producer Agreement and for the express and direct
benefit of Wall Street, I hereby:
A. Grant to Wall Street the perpetual right to use and
publish and to permit others to use and publish my
name, signature, approved likeness, and approved
biographical material concerning me for advertising
and trade purposes in connection with the sale and
exploitation of masters and records manufactured from
masters recorded pursuant to the Artist Agreement, or
to refrain therefrom.
B. Agree to look solely to Artist for the payment of
any advances, fees and/or royalties, as the case may
be, and will not assert any claim in this regard
against Wall Street or attempt to prevent the
manufacture, sale or distribution of phonograph
records manufactured from Masters produced under the
terms and conditions of the Artist Agreement and the
Producer Agreement. Any payments that I receive from
Wall Street in connection with the exploitation of
Masters or my services pursuant to Producer Agreement
shall have been made solely as an accommodation to
Artist and nothing contained herein, in the Producer
Agreement or in the Artist Agreement shall constitute
me a beneficiary of or party to the Artist Agreement
or any other agreement between Wall Street and
Artist.
C. Acknowledge and agree that each Master recorded
under the Producer Agreement embodying the results
and proceeds of my services (i) is prepared within
the scope of the Artist's engagement of my personal
services and is a "work made for hire" or (ii) is
prepared as part of a long-playing phonograph record
(or its substantial equivalent) which constitutes a
work specially ordered
A-1
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by Artist or Wall Street for use as a contribution to
a collective work and shall be considered a "work
made for hire." I further acknowledge that Wall
Street is the exclusive owner of copyright with
respect to each such Master and any "sound recording"
or "phonorecord" or "copy" manufactured therefrom
(individually and collectively called the "Work"),
and that Wall Street has the right to exercise all
rights of the copyright proprietor with respect
thereto, including, but not limited to, all exclusive
right specified in 17 U.S.C. ss. 106 and the
exclusive right to register copyright in the name of
Wall Street.
D. Notwithstanding the provisions of paragraph C above,
I agree that to the extent, if any, that I may be
deemed an "author" of any Work, I hereby irrevocably
transfer, grant, convey and assign to Wall Street,
exclusively, perpetually and throughout the universe,
all exclusive right, title and interest in and to
such Work, including, but not limited to, all
exclusive right of the copyright owner as specified
in 17 U.S.C. ss. 106. I hereby grant to Wall Street a
power of attorney, irrevocable and coupled with an
interest, to execute for me and in my name, all
documents and instruments necessary or appropriate to
effectuate the intents and purposes of this paragraph
D and to accomplish, evidence and perfect the rights
granted to Wall Street pursuant to this paragraph D
including but not limited to documents to apply for
and obtain all registration of copyrights in and to
any such Work, and documents to assign such
copyrights to Wall Street.
E. Agree that I shall not produce or co-produce, prior
to the date three (3) years after the Master shall
have been delivered to Wall Street in accordance with
the provisions of the Artist Agreement, any recording
for any person, firm or corporation other than Wall
Street which embodies, in whole or in part, any of
the selections recorded in the Masters.
_______________________________________
SS#:___________________________________
Address:_______________________________
_______________________________________
_______________________________________
A-2
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WALL STREET RECORDS LLC
d/b/a ANTRA RECORDS LLC
c/o A&M Records, Inc.
Worldwide Plaza
825 8th Avenue
New York, New York 10019
Dated: As of March 13, 1998
Ricardo Emanuel Brown, Jr.
(professionally known as "Kurupt")
c/o Katz, Smith & Cohen
Ivy Place, Second Floor
3423 Piedmont Road, N.E.
Atlanta, GA 30305
Attention: Jeff Smith, Esq.
Dear Mr. Brown:
Reference is made to our exclusive recording agreement with you dated
as of March 13, 1998 (the "Recording Agreement"). For good and valuable
consideration, the adequacy and receipt of which is hereby acknowledged, you and
we agree to amend the Recording Agreement as follows:
1. For purposes of paragraph 11 of the Recording Agreement, the term
"United States Controlled Composition Mechanical Rate" shall mean an amount
equal to one hundred percent (100%) of the United States Mechanical Rate and the
term "Canadian Controlled Composition Mechanical Rate" shall mean an amount
equal to one hundred percent (100%) of the Canadian Mechanical Rate.
2. Subparagraph 11 (a)(i)(C) of the Recording Agreement is hereby
deleted in its entirety and replaced with the following:
"(C) The term "Determination Date" shall mean the date of initial
release by us of the first Master embodying the Musical Composition in
question;"
3. The following is hereby added to the end of paragraph 11(c)(i) of
the Recording Agreement:
"Notwithstanding the foregoing provisions of this subparagraph (c)(i),
for Net Sales through Normal Retail Distribution Channels in the United
States of a particular
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Required Album in excess of Seven Hundred Fifty Thousand (750,000)
units, the maximum aggregate mechanical royalty rate for all
Selections, including Controlled Compositions, contained on such excess
units of such Required Album, regardless of the number of Selections
contained thereon, shall be the product of the United States Controlled
Composition Mechanical Rate, and eleven (11), in lieu of the maximum
provided in the immediately preceding sentence for Net Sales of Albums
in the United States."
4. Paragraph 20 of the Recording Agreement is hereby deleted in its
entirety and replaced with the following:
"We shall have the right, at our election, to assign this Contract or
any of our rights hereunder, in whole or in part, or to delegate any of
our obligations hereunder, in whole or in part, to any person, firm or
corporation. You shall not have the right to assign this Contract or
any of your rights or to delegate any of your obligations hereunder."
5. All terms used herein but not otherwise defined herein shall have
the meanings ascribed to them in the Recording Agreement.
6. As amended hereby, the Recording Agreement is ratified, confirmed
and acknowledged to be in full force and effect.
If the foregoing correctly reflects your understanding and agreement
with us, please so indicate by signing in the space provided below.
Sincerely,
WALL STREET RECORDS LLC
d/b/a ANTRA RECORDS LLC
By: /s/ xxxxxxxxxxxxxxxxx
---------------------
By: /s/ xxxxxxxxxxxxxxxxx
---------------------
AGREED AND ACCEPTED:
/s/ Ricardo E. Brown Jr.
- -----------------------------------------
Ricardo Emanuel Brown Jr. p/k/a "Kurupt"
2
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EXHIBIT A
PRODUCER DECLARATION
I, the undersigned, declare that I have read and understand
those relevant portions of the agreement between Wall Street Records LLC ("Wall
Street") c/o A&M Records, Inc., Worldwide Plaza, 825 8th Avenue, New York, New
York, 10019 and Ricardo Emanuel Brown, Jr. (professionally known as "Kurupt" and
referred to below as "Artist") dated as of March 13, 1998 ("Artist Agreement")
that pertain to my record production endeavors.
I hereby certify that I have produced or will have produced
certain master recordings embodying Artist's featured performance ("Masters")
pursuant to an agreement between Artist and me ("Producer Agreement") which
provides for valuable consideration to be paid to me. As part of my material
obligations pursuant to the Producer Agreement and for the express and direct
benefit of Wall Street, I hereby:
A. Grant to Wall Street the perpetual right to use and
publish and to permit others to use and publish my
name, signature, approved likeness, and approved
biographical material concerning me for advertising
and trade purposes in connection with the sale and
exploitation of masters and records manufactured from
masters recorded pursuant to the Artist Agreement, or
to refrain therefrom.
B. Agree to look solely to Artist for the payment of any
advances, fees and/or royalties, as the case may be,
and will not assert any claim in this regard against
Wall Street or attempt to prevent the manufacture,
sale or distribution of phonograph records
manufactured from Masters produced under the terms
and conditions of the Artist Agreement and the
Producer Agreement. Any payments that I receive from
Wall Street in connection with the exploitation of
Masters or my services pursuant to Producer Agreement
shall have been made solely as an accommodation to
Artist and nothing contained herein, in the Producer
Agreement or in the Artist Agreement shall constitute
me a beneficiary of or party to the Artist Agreement
or any other agreement between Wall Street and
Artist.
C. Acknowledge and agree that each Master recorded under
the Producer Agreement embodying the results and
proceeds of my services (i) is prepared within the
scope of the Artist's engagement of my personal
services and is a "work made for hire" or (ii) is
prepared as part of a long-playing phonograph record
(or its substantial equivalent) which constitutes a
work specially ordered
A-1
<PAGE>
by Artist or Wall Street for use as a contribution to
a collective work and shall be considered a "Work
made for hire." I further acknowledge that Wall
Street is the exclusive owner of copyright with
respect to each such Master and any "sound recording"
or "phonorecord" or "copy" manufactured therefrom
(individually and collectively called the "Work"),
and that Wall Street has the right to exercise all
rights of the copyright proprietor with respect
thereto, including, but not limited to, all exclusive
right specified in 17 U.S.C. ss. 106 and the
exclusive right to register copyright in the name of
Wall Street.
D. Notwithstanding the provisions of paragraph C above,
I agree that to the extent, if any, that I may be
deemed an "author" of any Work, I hereby irrevocably
transfer, grant, convey and assign to Wall Street,
exclusively, perpetually and throughout the universe,
all exclusive right, title and interest in and to
such Work, including, but not limited to, all
exclusive right of the copyright owner as specified
in 17 U.S.C. ss. 106. I hereby grant to Wall Street a
power of attorney, irrevocable and coupled with an
interest, to execute for me and in my name, all
documents and instruments necessary or appropriate to
effectuate the intents and purposes of this paragraph
D and to accomplish, evidence and perfect the rights
granted to Wall Street pursuant to this paragraph D
including but not limited to documents to apply for
and obtain all registration of copyrights in and to
any such Work, and documents to assign such
copyrights to Wall Street.
E. Agree that I shall not produce or co-produce, prior
to the date three (3) years after the Master shall
have been delivered to Wall Street in accordance with
the provisions of the Artist Agreement, any recording
for any person, firm or corporation other than Wall
Street which embodies, in whole or in part, any of
the selections recorded in the Masters.
/s/ Ricardo E. Brown
-------------------------------
A-2
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EXCLUSIVE PRODUCTION/RECORDING AGREEMENT
AGREEMENT made this 17th day of March 1997, by and between WALL STREET
RECORDS, INC., a New Jersey Corporation, 2500 McClellan Avenue, Suite 340,
Pennsauken, NJ 08109 (hereinafter referred to as "COMPANY") and GRANT ELDRIDGE,
an individual citizen of the United States, p/k/a "EL-DREX" (hereinafter
referred to as "ARTIST").
WITNESSETH
WHEREAS, COMPANY is currently engaged in the business of recording
artists and attempting to secure Distribution Agreements with third party record
companies for release of Artist's recordings, and
WHEREAS, ARTIST wishes to exclusively render ARTIST's services as
recording artist to COMPANY; and
WHEREAS, ARTIST may herewith concurrently enter into a Management,
Co-Publishing and Exclusive Songwriter's Agreement with COMPANY and/or its
publishing affiliates and the duration of the term therein shall be coterminous
with this AGREEMENT.
NOW, THEREFORE, in consideration of the mutual promises herein set
forth, COMPANY and ARTIST hereby agree as follows:
1. COMPANY hereby engages ARTIST's exclusive personal services as a
phonograph recording artist and ARTIST hereby agrees to record solely for
COMPANY pursuant to the terms set forth herein.
2. The Initial Term of this AGREEMENT be a period of twelve (12)
months, commencing as of the date of the completion of the demo tapes. Subject
to the terms hereof, COMPANY shall have five (5) one year options to extend the
Initial Term for five (5) additional consecutive periods of one (1) year each
(the "First, Second, Third, Fourth and Fifth Additional Terms.") Subject to
Paragraph 3(c) below, each such option shall be deemed exercised unless COMPANY
notifies ARTIST to the contrary by written notice delivered at any time prior to
the expiration of the then-current Term.
3. (a) ARTIST understands that COMPANY shall not actually manufacture
and distribute phonograph records embodying ARTIST's performances, but rather
COMPANY shall seek to enter into an agreement with a third party record company
or companies (the "Record Company") pursuant to which the Record Company shall
manufacture and distribute such phonograph records (the "Distribution
Agreement"). Accordingly, notwithstanding the provisions of Paragraph 2 above,
ARTISTS agrees that the Initial Term of any Additional Term hereunder during
which the term of any Distribution Agreement shall commence shall be extended
until the last day of the initial term of such Distribution Agreement and, in
such event, specific dates, periods and time requirements referred to herein
(including but not limited to option exercise dates) shall be adjusted to
conform with the dates, periods and time requirements provided for in said
Distribution Agreement. ARTIST further agrees that in the event that the term
hereof as set forth in Paragraph 2 would expire prior to the expiration of the
term of any Distribution Agreement, then the term hereof shall be automatically
extended until expiration of the term of such Distribution Agreement and any and
all extensions, renewals, substitutions and continuations thereof.
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(b) Other than provisions 6(a) and (b) and 13 herein which
relate to advances, royalties and accountings due ARTIST, the parties agree that
any other provision herein which addresses the same subject matter as addressed
in the Distribution Agreement (e.g., definitions, warranties, etc.) shall be
deemed to conform to the corresponding provision in the Distribution Agreement,
but to the extent that any provision contained in the Distribution Agreement
does not have a corresponding provision herein (e.g. reserves, free goods), such
provisions of the Distribution Agreement shall be deemed incorporated herein.
(c) Notwithstanding anything to the contrary contained herein,
in the event that within the Initial Term Company does not enter into a
Distribution Agreement with a Record Company pursuant to which a recording
embodying Artist's performances shall be released, ARTIST shall have the right
to terminate this AGREEMENT by written notice delivered to COMPANY within thirty
(30) days after expiration of the Initial Term, in which case this AGREEMENT
shall terminate upon COMPANY'S receipt of ARTIST's notice. ARTIST agrees,
however, that if COMPANY is engaged in substantial negotiations with such a
Record Company as of the expiration of said Initial Term, same shall be extended
for an additional period of ninety (90) days.
(d) Notwithstanding anything to the contrary contained herein,
ARTIST shall allow COMPANY to release, manufacture, distribute and sell on
COMPANY'S record label any of the material, that COMPANY and ARTIST record,
including but not limited to a "compilation album" of ARTIST's cuts together
with other artists.
Further, ARTIST agrees that in the event COMPANY does release on its
own label pursuant to paragraph 3(d) for national distribution ARTIST's
recordings and said recording achieve sales of Ten Thousand (10,000) or more
units in the first year of release, then COMPANY shall be granted an additional
one (1) year period to release one (1) additional LP of ARTIST under the terms
and conditions set forth herein.
4. ARTIST shall record at mutually agreeable times at studios selected
by COMPANY in consultation with ARTIST with a copy to ARTIST pursuant to a
recording budget determined solely by COMPANY. ARTIST acknowledge that COMPANY
shall select, after consultation with ARTIST, the individual producer(s) of all
recordings, and that COMPANY shall select the musical compositions to be
contained thereon after consultation with ARTIST. During the Initial Term, a
minimum of three (3) sides, and during each Additional Term a minimum of ten
(10) sides per Term, shall be recorded hereunder. COMPANY shall have the right
to require ARTIST to record such number of additional sides (not to exceed an
aggregate of two (2) LPs per Term) as may be required to deliver to a Record
Company pursuant to the Distribution Agreement. ARTIST further agrees to record
all sides required to be recorded by ARTIST hereunder in accordance with the
time requirements set forth in the Distribution Agreement. Each side shall be
subject to COMPANY and/or the Record Company's approval as technically and
commercially satisfactory and at COMPANY'S request, ARTIST agrees to re-record
any composition until a commercially satisfactory side is completed.
5. (a) COMPANY shall advance all Demo recording costs incurred in
connection with the production of the sides recorded prior to the execution of
the Distribution Agreement, inclusive but not limited to studio time, Producer's
fees, aux. gear, engineer, tape, inter alia. COMPANY shall recoup said costs out
of the initial funds received through the Distribution Agreement or from any
other funds received by ARTIST through utilization of any of the subject
recordings.
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(b) The Record Company shall advance all Recording costs incurred in
connection with the production of the sides recorded pursuant to the
Distribution Agreement. As used in this Paragraph 5(b), "Recording Costs" shall
be defined as the term is defined in the Distribution Agreement. If the Demos or
any part thereof are incorporated in the masters exploited by the Record Company
pursuant to the Distribution Agreement, COMPANY shall be entitled to be
reimbursed for those of the Demo Recording Costs which relate to the portions of
the Demos so incorporated out of the recording budget made available by the
Record Company for the recording of such masters.
6. (a) COMPANY shall pay ARTIST recoupable advances as follows:
(i) Immediately upon execution of this AGREEMENT an advance in the
sum of Thirty five Hundred Dollars ($3500).
(ii) With respect to singles if recorded separate from an album
project pursuant to the Distribution Agreement: One Thousand Dollars
per single ($1000);
(iii) With respect to albums recorded pursuant to the Distribution
Agreement: Seventy five Hundred Dollars ($7500);
(iv) With respect to albums recorded and released pursuant to the
Distribution Agreement in each additional option term as follows:
First additional term: Seventy-five Hundred Dollars ($7,500)
Second additional term: Ten Thousand Dollars ($10,000)
Third additional term: Fifteen Thousand Dollars ($15,000)
Fourth additional term: Twenty Thousand Dollars ($20,000)
Fifth additional term: Twenty-five Thousand Dollars ($25,000)
For each album recorded during any Option Period, company agrees
to pay to ARTIST an Artist Advance an amount equal to the greater
of: 50% of the ARTIST royalties earned by ARTIST from USNRC net
sales of the preceding albums, but not less than floors and not more
than ceilings set forth below in the aggregate:
LP ADVANCES
-- --------
FLOOR CEILING
1 $ 7,500 $100,000
2 10,000 100,000
3 15,000 100,000
4 20,000 100,000
5 25,000 100,000
(v) The above advances shall be payable one-half on commencing
recording and one-half on completion of recording and subject to
entering into said distribution of third-party record contract.
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(b) Subject to COMPANY's recoupment of recording and other costs,
marketing expenses and tour support expenses (including, but not limited to,
fifty percent (50%) of all video costs and independent promotion costs charged
to COMPANY pursuant to the Distribution Agreement), and advances made to ARTIST
and/or on ARTIST's behalf pursuant to this and/or any other agreement between
ARTIST and COMPANY, COMPANY shall pay ARTIST a royalty of six percent (6%) for
LPs and five percent (5%) for singles of at least ninety percent (90%) of the
retail royalty base price set by the Record Company, subject to the customary
adjustments contained in the Distribution Agreement. Should the Distribution
Agreement pay royalties on other than ninety percent (90%) of the retail royalty
base price, the parties agree to conform this Agreement to that distribution
agreement. In the further event option terms are exercised, then ARTIST shall be
granted a royalty increase of one-half (1/2) point on LPs in each additional
term as follows:
First additional term: Six percent (6%)
Second additional term Six and one-half percent (6.5%)
Third additional term: Seven percent (7%)
Fourth additional term: Seven and one-half percent (7.5%)
Fifth additional term: Eight percent (8%)
Royalties would be increased by one-half percent (1/2%) should any
release reach gold sales status and an additional increase of one-half percent
(1/2%) for a total of one percent (1%) should any release reach platinum sales
status.
7. (a) As to masters embodying performances of ARTIST together with
the performances of another artist or artists, the royalty rate otherwise
payable hereunder with respect to sales of any record derived from any such
master and the recording costs and/or advances otherwise payable by Company
hereunder with respect to any such master shall be prorated by multiplying such
royalty rate or recording costs and/or advances by a fraction, the numerator of
which is one (1) and the denominator of which is the total number of artists
whose performances are embodied on such master.
8. COMPANY and ARTIST's designees shall have the exclusive right to use
Artist's name and likeness for trade, advertising and publicity purposes in
connection with phonograph records embodying ARTIST's performances during the
Term hereof, and in promoting COMPANY and/or the Record Company.
9. ARTIST hereby warrants the following, and agree to indemnify COMPANY
and all parties claiming rights through COMPANY, with respect to any costs
incurred in connection with claim arising out of a breach or alleged breach of
same:
(a) ARTIST has the right to enter into this AGREEMENT
(b) During the initial and Additional Terms hereof, ARTIST
shall not perform for the purpose of making records for anyone other than
COMPANY and/or the Record Company and shall not authorize the use of ARTIST's
names, likenesses or other identification for the purpose of distributing,
selling, advertising or exploiting records for anyone other than COMPANY and/or
the Record Company anywhere in the world;
(c) ARTIST shall not perform any selection recorded hereunder
for the purpose of making records for anyone other than COMPANY and/or the
Record Company for the later of five (5) years after the initial release of the
respective record containing such selection or two (2) years after the
expiration or other termination of this AGREEMENT (the "Re-Recording
Restriction"); and
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<PAGE>
(d) If ARTIST makes any sound recording during the Initial and
Additional Terms hereof for motion pictures, television, electrical
transcriptions or any other medium, or should ARTIST thereafter perform for any
such purpose any selection recorded hereunder to which the Re-Recording
Restriction then applies, ARTIST will do so only pursuant to a written
agreement, of which ARTIST shall furnish COMPANY with a copy upon execution,
prohibiting the use of such recordings for record purposes anywhere in the
world.
10. As between ARTIST and COMPANY, COMPANY shall own all right, title
and interest, including worldwide copyrights and renewal copyrights, in all
recordings recorded hereunder and COMPANY shall have the right to transfer,
license or assign its interest in same as COMPANY sees fit. COMPANY shall for
purposes of the foregoing be deemed to be ARTIST's "employer for hire." ARTIST
acknowledges that expiration or other termination of the term of this AGREEMENT
shall not affect ARTIST's rights as aforesaid. COMPANY shall have the right to
assign this AGREEMENT or any of COMPANY rights and obligations hereunder.
ARTIST may not assign this AGREEMENT or any of ARTIST's rights hereunder without
COMPANY'S prior written consent.
11. ARTIST understands that this AGREEMENT applies to ARTIST as an
individual performing artist and/or as members of any combination of performing
artists with whom Artist is or may become associated during the Term hereof.
ARTIST shall have the right to perform for others as a "background singer" in
accordance with the standard customs in the recording industry, subject to any
restrictions contained in any Distribution Agreement, including without
limitation that Artist shall not receive any credit on the record, tape or CD
label, nor the front side of any album, cassette or CD cover or container, and
that COMPANY and the Record Company shall receive a "courtesy of" credit on the
rear side of all such covers and containers.
12. (a) ARTIST agree that as used herein, the term "recording" shall
include any and all types of studio and audio/visual recordings now or hereafter
known, and that COMPANY also shall be solely and exclusively entitled to
ARTIST's services in connection with such audio/visual recordings, and shall be
deemed the sole and exclusive owner of such audio/visual recordings to the same
extent as provided for herein in respect of audio recordings. As used herein, a
"video" shall mean an audio/visual recording embodying sound and visual images
of a performance by ARTIST, including but not limited to so-called "promotional"
and "in-concert" videos.
(b) subject to ARTIST's other professional commitments, ARTIST
shall upon COMPANY'S request, appear on dates and at film studios or other
locations designated by COMPANY on reasonable notice to ARTIST for filming,
taping or other permanent fixation of Videos of ARTISTS' performances of
selections designated by COMPANY, and ARTIST shall cooperate fully with COMPANY
and with COMPANY'S designees in the creation of such Videos. All production
costs paid or incurred by COMPANY and/or COMPANY'S affiliates in connection with
the creation of Videos shall be recoupable in the manner and by the method set
forth in Paragraph 6(a) above.
(c) COMPANY and/or the Record Company shall have the right to use
and allow others to use the Videos for advertising and promotional purposes with
no payment to ARTIST or COMPANY. As used herein, "advertising and promotional
purposes" shall mean all uses for which COMPANY or the Record Company receive no
monetary consideration for licenses in excess of a reasonable reimbursement for
the actual costs incurred by COMPANY or the Record Company for tape stock,
duplication of the Video and shipping.
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<PAGE>
(d) COMPANY and the Record Company shall also have the right to use
and allow others to use each Video for commercial purposes. As used herein,
"commercial purposes" shall mean any use for which COMPANY or the Record Company
receives monetary consideration for licenses in excess of a reasonable amount as
reimbursement for the actual costs incurred by COMPANY or the Record Company for
tape stock, duplication of the Video and shipping.
(e) COMPANY and the Record Company shall have the right to use and
publish ARTIST's names, likenesses and biographical materials concerning ARTISTs
in each Video and for advertising purposes of trade in connection with the sale
and other exploitation of each Video hereunder.
13. COMPANY shall compute the monies received by COMPANY pursuant to
the Distribution Agreement during the semiannual period ending December 31 and
June 30 and shall submit a statement and pay monies due by March 31 and
September 30, respectively. Said statements or statement shall state royalties
due after deducting any and all unrecouped advances and chargeable costs under
this agreement and/or any other agreement between ARTIST and COMPANY. All such
statements rendered by COMPANY shall be binding by ARTIST and not subject to any
objection for any reason unless specific written objection, stating the basis
thereof, is received by COMPANY within one (1) year of the date rendered, in
which event such statements shall be binding in all respects except those
specifically objected to as aforesaid. ARTIST shall have the right to audit
COMPANY'S books and records in connection with those statements with respect to
which ARTIST's rights to object have not expired pursuant to the preceding
sentence. Any such audit shall take place only after reasonable prior written
notice during business hours and no more often than once per year.
14. a. ARTIST agrees that COMPANY may grant to the Record Company
mechanical licenses at reduced rates (but not less than seventy-five percent
(75%) of then-statutory rate with the customary imputed maximum number of sides,
currently ten (10), for any composition written, owned or controlled by ARTIST
in whole or in part, which ARTIST records hereunder.
b. ARTIST hereby grants exclusively to COMPANY (or to COMPANY's
designated publishing entity) all of the rights throughout the Universe which
are specified in Exhibit "A" annexed hereto in all musical compositions which
you may write or compose in whole or in part during the Term hereof (or which
are acquired directly or indirectly by you or by any person, firm or coperation
with which ARTIST is affiliated during the term hereof) and those COMPOSITIONS
set forth on the Schedule of Assigned Compositions annexed hereto.
15. ARTIST hereby grants to COMPANY and COMPANY's designees all
merchandising rights and the sole and exclusive rights to use ARTIST's name
(both legal and professional), likeness, picture and portrait in any manner
whatsoever in connection with the exercise of the merchandising rights herein
granted and/or the exploitation of all records produced and/or distributed
hereunder. COMPANY agrees to consult with ARTIST for prior approval on any and
all merchandising deals on behalf of ARTIST. COMPANY shall have the right to
grant others (including the Record Company and companies affiliated with COMPANY
or the Record Company), upon such terms as COMPANY shall deem proper. COMPANY
shall pay ARTIST fifty percent (50%) of all net income received from the
exploitation of said merchandising rights.
16. ARTIST hereby acknowledges that ARTIST's services are unique
and extraordinary, the loss of which cannot be adequately compensated by an
action of law, and that COMPANY shall be entitled to injunctive relief in the
event of ARTIST's breach thereof.
17. ARTIST agrees to sign all so-called "artist inducement letters"
or other documents which COMPANY or the Record Company may require in connection
with the execution or operation of the Distribution Agreement and to otherwise
perform for COMPANY in accordance with all of the terms and conditions of the
Distribution Agreement insofar as ARTIST's obligations in connection therewith
are concerned.
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18. ARTIST agrees that if, in ARTIST's opinion, COMPANY has
breached this agreement, ARTIST shall deliver to COMPANY, by registered mail,
return receipt requested, a written notice specifying the alleged breach and
COMPANY shall have sixty (60) days from receipt of such notice to substantially
cure such alleged breach. Such alleged breach shall not be grounds for any
action, claim or suit, in law or in equity, unless the alleged breach shall not
have been substantially cured within said sixty (60)-day period
19. COMPANY shall have the right, at COMPANY's election, to suspend
the operation of this agreement if for any reason whatsoever ARTIST is unable or
unwilling to render any services in accordance with the terms hereof or for
reasons of force majeure or for any such reason the term of the Distribution
Agreement is suspended. Such suspension shall commence upon written notice to
ARTIST and shall last for the duration of any such unavailability or
unwillingness to render services or, if COMPANY prefers, COMPANY shall have the
right to terminate this agreement by written notice during any such period of
suspension. At COMPANY's election, a period of time equal to the duration of
such suspension shall be added to the Term hereof, and COMPANY's dates for
exercise of COMPANY's options hereunder shall be accordingly postponed. The
foregoing shall be in addition to any other rights or remedies COMPANY may have
at law or in equity
20. Nothing herein shall be deemed to result in an extension of the
Term of this agreement for a period in excess of the maximum term permitted by
applicable law for the enforcement of personal service agreements.
21. Each party warrants that such party has read and understands
the term herein. ARTIST acknowledges having been advised to seek independent
legal counsel in connection with the negotiation hereof and whether or not
ARTIST has done so, ARTIST hereby waives any right ARTIST might have to
challenge the validity of this agreement based on ARTIST's failure to understand
its term.
The parties acknowledge that as a result of COMPANY's principals'
relationship in multiple roles (certain principals may be considered as
publisher and/or manager and/or producer, for example), there exists a potential
conflict of interest. This shall confirm that ARTIST has been advised of this
potential conflict of interest, and ARTIST consents to the parties' continued
relations despite this potential conflict of interest.
Neither COMPANY nor any of its principals have acted as legal
counsel on behalf of ARTIST in regard to this AGREEMENT. Furthermore, COMPANY
has encouraged ARTIST to obtain independent counsel prior to executing this
AGREEMENT.
22. Courtesy copies of all notices sent hereunder to COMPANY shall
be sent to COMPANY's attorney, Lloyd Zane Remick, Esq., Burditt & Radzius, Ch.,
1608 Walnut Street, Suite 703, Philadelphia, PA 19103.
23. This AGREEMENT shall be construed in accordance with the laws
of the Commonwealth of Pennsylvania, applicable to agreements to be entered into
and wholly performed therein. This AGREEMENT represents the sole and final
agreement between the parties, and may not be modified except by an instrument
in writing signed by both parties.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT
as of the day and year first above written.
WALL STREET RECORDS, INC. ("COMPANY")
BY: /s/ Joseph Marrone, Esq.
-------------------------------
JOSEPH MARRONE, ESQ., PRES.
GRANT ELDRIDGE p/k/a EL-DREX ("ARTIST")
BY: /s/ Grant Eldridge
-------------------------------
GRANT ELDRIDGE
<PAGE>
CO-PUBLISHING AGREEMENT
Annexed hereto and made part hereof of, THIS AGREEMENT made this day
of 1997, by and between Wall Street Records, Inc. or it's designee, 2500
McClellan Avenue, Suite 340, Pennsauken, NJ 08109 (hereinafter referred to as
"COMPANY") and Grant Eldridge, p/k/a El-Drex, (hereinafter referred to as
"ARTIST";
WITNESSETH
WHEREAS, it is the intention of COMPANY and ARTIST that they shall jointly
own, in equal shares, the musical compositions (hereinafter collectively
referred to as the "COMPOSITION") listed or described below, so that fifty
percent (50%) of the entire worldwide right, title and interest, including the
copyright, the right to copyright and the renewal right, in and to the
COMPOSITION shall be owned by COMPANY and fifty percent (50%) thereof shall be
owned by ARTIST:
WHEREAS, the COMPOSITION has been or shall be registered for copyright in
the names of COMPANY and ARTIST in the Copyright Office of the United States of
America;
NOW, THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged by each party hereto, it is agreed as follows:
1. a. COMPANY and ARTIST shall joint1y own the COMPOSITION, in equal
shares including all of the worldwide right, title and interest, including the
copyrights, the right to copyright and the renewal rights, therein and thereto.
b. The term herein shall be co-extensive with the term of the Exclusive
Production/Recording Agreement and/or Distribution Agreement entered into by
COMPANY. The rights granted to COMPANY in this Exhibit "A" shall extend for the
entire term of copyright in each of the Assigned Compositions in each country of
the world, together with all extensions and renewals thereof; the derogate from
the rights granted to COMPANY in those Assigned Compositions assigned to COMPANY
prior to the date of such expiration or termination.
2. The COMPOSITION shall be registered for copyright by COMPANY in the
names of COMPANY and ARTIST in the office of the Register of Copyrights of the
United States of America and COMPANY shall take all reasonable measures to
protect the copyright in the COMPOSITION in those territories which are
signatories to the Universal Copyright Convention. If the COMPOSITION has
heretofore been registered for copyright in the name of ARTIST, ARTIST shall
simultaneously herewith deliver to COMPANY an assignment of a one-half interest
therein, in form acceptable to COMPANY.
3. COMPANY shall have the sole and exclusive right to administer and
exploit the COMPOSITION, to print, publish, sell, use and license the use of the
COMPOSITION throughout the world, and to execute in its own name any and all
licenses and agreements affecting or respecting the COMPOSITION, including but
not limited to licenses for mechanical reproduction, public performance,
synchronization uses, subpublication, merchandising, and advertising and to
assign or license such rights to others. This statement of exclusive rights is
only in clarification and amplification of the rights of COMPANY hereunder and
not in limitation thereof.
4. COMPANY shall be entitled to receive and collect and shall receive and
collect all gross receipts derived from the COMPOSITION. "Gross receipts", as
used herein, shall mean any and all revenue, income and sums derived from the
COMPOSITION from any and all sources whatsoever.
<PAGE>
5. COMPANY shall pay to ARTIST fifty percent (50%) of the net income
actually received and derived by COMPANY from the COMPOSITION. "Net income", as
used herein, shall mean the gross receipts derived by COMPANY from the
COMPOSITION, less the following:
(a) A sum equal to ten percent (10%) of the Gross Receipts as an
administration charge for overhead;
(b) Royalties and other sums which are paid by COMPANY to the
composers and writers of the COMPOSITION pursuant to the provisions of the
songwriter's agreements between ARTIST and such composers and writers (a copy of
which is attached hereto as Exhibit "A") or which, at COMPANY's election, are
paid by COMPANY to ARTIST, in trust, for payment over by ARTIST to such
composers and writers pursuant to the provisions of said songwriter's
agreements;
(c) Collection or other fees customarily and actually charged by
or any other collection agent which may be used by
COMPANY;
(d) Actual, out-of-pocket administrative and exploitation expenses of
COMPANY with respect to the COMPOSITION for registration fees, advertising and
promotion expenses directly related to the COMPOSITION, the costs of
transcribing for lead sheets, and the costs of producing demonstration records;
(e) Attorneys' fees directly related to the defense of claims
respecting the COMPOSITION incurred by COMPANY;
(f) The costs of printing, engraving, arranging and editing printed
editions of the COMPOSITION incurred by COMPANY.
6. The performing rights in the COMPOSITION, to the extent permitted by
law, shall be assigned to and licensed by The American Society of Composers,
Authors and Publishers (ASCAP). ASCAP shall be and hereby is authorized to
collect and receive all monies earned from the public performance of the
COMPOSITION and to pay directly to COMPANY one hundred percent (100%) of the
amount allocated by ASCAP as the publisher's share of public performance fees.
7. Mechanical royalties for the COMPOSITION for the United States and
Canada shall be collectible by or any other collection agent which may be
designated by COMPANY, provided however, that COMPANY shall, in the case of any
record company affiliated with COMPANY, issue the mechanical licenses directly
to said record company at the then current statutory rate and collect mechanical
royalties directly therefrom in which case there shall be no collection fees as
referred to in paragraph 5(c).
8. Statements as to monies payable hereunder shall be sent by COMPANY to
ARTIST semi-annually within ninety (90) days after the end of each semi-annual
calendar period. Statements shall be accompanied by appropriate payments. ARTIST
shall be deemed to have consented to all royalty statements and other accounts
rendered by COMPANY to ARTIST, and said statements and other accounts shall be
binding upon ARTIST and not subject to any objection for any reason, unless
specific objection in writing, setting forth the basis thereof, is given by
ARTIST to COMPANY within two (2) years from the date rendered. ARTIST or a
certified public accountant in its behalf may, at reasonable intervals, examine
the books of COMPANY pertaining to the C0MPOSITION during the COMPANY's normal
business hours and upon ten (10) days written notice.
9. Each party hereto shall give the other the equal benefits of any
warranties or representations which it obtained or shall obtain under any
agreements affect the COMPOSITION.
10. COMPANY shall have the sole right to prosecute, defend, settle and
compromise all suits,
<PAGE>
claims, and actions respecting the COMPOSITION, and generally to do and perform
all things necessary concerning the same and the copyrights therein, to prevent
and restrain the infringement of copyrights or other rights with respect to the
COMPOSITION. In the event of the recovery by COMPANY of any monies as a result
of a judgement or settlement, such monies, less an amount equal to the expense
of obtaining said monies, including counsel fees, shall be deemed additional
gross receipts hereunder. ARTIST shall have the right to provide counsel for
itself, but at its own expense, to assist in any such manner. COMPANY will not
settle any claim respecting the COMPOSITION without ARTIST's consent, which
consent shall not be unreasonable withheld.
11. The rights of the parties hereto in and to the COMPOSITION shall extend
for the term of the copyright of the COMPOSITION and of any derivative
copyrights therein in the United States of America and throughout the rest of
the world and for the terms of any renewals or extensions thereof in the United
States of America and throughout the rest of the world.
12. This Agreement sets forth the entire understanding between the parties,
and cannot be changed, modified or cancelled except by an instrument signed by
the party sought to be bound. This Agreement shall be governed by and construed
under the laws of the Commonwealth of Pennsylvania applicable to Agreements
wholly performed therein.
13. ARTIST hereby warrants and represents that it has the right to enter
into this Agreement and to grant to COMPANY all of the rights granted herein,
and that the exercise by COMPANY of any and all of the rights granted to COMPANY
in this Agreement will not violate or infringe upon any common law or statutory
rights of any person, firm or corporation, including, without limitation,
contractual rights, copyrights and rights of privacy. The rights granted herein
are free and clear of any claims, demands, liens or encumbrances. ARTIST agrees
to and does hereby indemnify, save and hold COMPANY, its assigns, licensees, and
its and their directors, officers, shareholders, agents and employees harmless
from any and all liabilities, claims, demands, loss and damage (including
attorneys fees and court costs) arising out of or connected with any claim by a
third party which is consistent with any of the Warranties, representations,
covenants, or agreements made by ARTIST herein and ARTIST agrees to reimburse
COMPANY, on demand, for any payment made by COMPANY at any time after the date
hereof with respect to any liability or claim to which the foregoing indemnity
applies. Pending the determination of any such claim, COMPANY may withhold
payment of royalties or other monies hereunder, provided that all amounts so
withheld are reasonably related to the amount of said claim and the estimated
attorneys' fees in connection therewith, and provided further that ARTIST shall
have the right to post a bond in an amount reasonably satisfactory to COMPANY by
a bonding company reasonably satisfactory to COMPANY, in which events COMPANY
shall not withhold payments as aforesaid.
14. All notices, statements or other documents which either party shall be
required or shall desire to give to the other hereunder must be in writing and
shall be given by the parties hereto only in one of the following ways:
a. By personal delivery; or
b. By addressing them as indicated below, and by depositing them
postage prepaid, in the United States mail, air-mail if the address is outside
of the Commonwealth in which such notice is deposited.
The addresses of the parties shall be those of which the other party
actually receives written notice and until further notice are:
<PAGE>
COMPANY:
Wall Street Records, Inc.
2500 McClellan Avenue, Suite 340
Pennsauken, NJ 08109
ARTIST:
Grant Eldridge
A courtesy copy of all mailings should be sent as follows:
Lloyd Z. Remick, Esq.
Burditt & Radzius, Chartered
1608 Walnut Street, Suite 703
Philadelphia, PA 19103
15. This Agreement shall not be deemed to give any right or remedy to any
third party whatsoever unless said right or remedy is specifically granted to
such third party by the terms hereof.
16. The parties hereto shall execute any further documents including,
without limitation, assignments of copyrights, and do all acts necessary to
fully effectuate the terms and provisions of this Agreement.
17. COMPANY may enter into subpublishing agreements with, or assign, or
license any of its rights hereunder to, one or more other person, firms or
corporations for any one or more countries of the world. In the event COMPANY
enters into a subpublishing or administration agreement for any country of the
world with a company affiliated with or otherwise related to COMPANY, such
agreement shall be deemed to have been made with an independent third party
provided, that no foreign subpublishing agreement respecting the COMPOSITION
shall be on terms less favorable to COMPANY than what is commonly referred to in
the music publishing industry and a 75/25/10 division of royalties and a
50/50/10 division with respect to so-called foreign cover records. ARTIST
acknowledges that COMPANY has the right to administer and publish compositions
other than the COMPOSITION.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year above set forth.
COMPANY ARTIST
WALL STREET RECORDS, INC. GRANT ELDRIDGE p/k/a EL-DREX
BY: /s/ Joseph Marrone By: /s/ Grant Eldridge
------------------------------ ---------------------------
JOSEPH MARRONE, ESQ., PRES. GRANT ELDRIDGE
Date: 3/17/97 Date: 3/17/97
--------- ---------
<PAGE>
WALL STREET RECORDS LLC
d/b/a ANTRA RECORDS
c/o A&M Records, Inc.
Worldwide Plaza
825 8th Avenue
New York, New York 10019
Dated: As of August 19, 1998
David Ware
(currently, professionally known as "Baby S")
c/o Bobbitt & Roberts
1620 26th Street
Suite 150 South
Santa Monica, California 90404
Attention: Jacque Shirley, Esq.
Dear Mr. Ware:
The following constitutes your and our agreement ("Contract"):
1. Services. During the term of this Contract ("Term") you
shall, in accordance with the provisions hereof, render to us your services
and furnish to us the services of one (1) or more producers for the purpose of
recording and delivering to us Masters.
2. Term.
(a) The Term shall consist of an "Initial Period" and of
the "Renewal Periods" for which we shall have exercised the options
hereafter provided. We shall have three (3) separate options, each to
extend the Term for a Renewal Period. The Initial Period and each
Renewal Period are each hereafter sometimes referred to generally as
a "Contract Period." Each Renewal Period is hereafter sometimes
referred to respectively in chronological order as the "First Renewal
Period," "Second Renewal Period," and "Third Renewal Period." We may
exercise each option to extend the Term for a Renewal Period by
giving you notice of our election to do so at any time prior to the
commencement of the Renewal Period for which our option is exercised;
(b) (i) The Initial Period shall commence on the date
hereof and shall continue until the date nine (9) months, or such
fewer number of days of which we may advise you in writing, after
the initial release in the United States, if any, of the last
Album required to be delivered to us in
1
<PAGE>
fulfillment of your "Recording Commitment" (defined below)
hereunder for the Initial Period, which initial release, for
purposes of this subparagraph 2(b)(i) only, shall be deemed to
occur on the earlier of, (1) the date of the actual initial
release in the United States, if any, of that last Album; or (2)
the date that is one hundred twenty (120) days after your
delivery to us of that last Album. No days between November 15
and February 15 of the next calendar year shall be taken into
account for purposes of determining the duration or end of that
one hundred twenty (120) day period referred to in the
immediately preceding sentence; and
(ii) Each Renewal Period shall run consecutively,
shall commence upon the expiration of the immediately-preceding
Contract Period and shall continue until the date nine (9)
months, or such fewer number of days of which we may advise you
in writing, after the initial release in the United States, if
any, of the last Album required to be delivered to us in
fulfillment of your Recording Commitment for that Renewal Period,
which initial release, for purposes of this subparagraph 2(b)(ii)
only, shall be deemed to occur on the earlier of: (1) the date of
the actual initial release in the United States, if any, of that
last Album; or (2) the date that is one hundred twenty (120) days
after your delivery to us of that last Album. No days between
November 15 and February 15 of the next calendar year shall be
taken into account for purposes of determining the duration or
end of that one hundred twenty (120) day period referred to in
the immediately preceding sentence; and
(c) Notwithstanding the foregoing, if as of the last date
on which we have the right to extend the Term for a Renewal Period
pursuant to subparagraph (b)(i) or (b)(ii) above, we have failed to
exercise our option to extend the Term for the next Renewal Period,
the then-current Contract Period nonetheless shall continue until you
notify us in writing of that failure, referring specifically to this
subparagraph 2(c). If we fail to exercise our option to extend the
Term for the next Renewal Period on or before the date that is thirty
(30) days after we receive that specific written notice from you,
then the Term shall end on the date that is thirty (30) days after we
receive that notice from you, as if that date were the original
expiration date of the Term, without any liability or additional
obligation to you in connection therewith.
3. Recording Commitment.
(a) Your "Recording Commitment" is as follows: During the
Initial Period, you shall record for and deliver to us, at a minimum,
Masters sufficient to constitute one (1) Album, plus, at our option,
Masters sufficient to constitute one (1) additional Optional Album,
and during each Renewal Period, if any, you shall record for and
deliver to us, at a minimum, Masters sufficient to constitute one (1)
Album, plus, at our option, Masters sufficient to constitute one
2
<PAGE>
(1) additional Optional Album; provided, however, that in the
aggregate, without your prior consent, you shall not have the
obligation to deliver to us hereunder in excess of seven (7) "Required
Albums" (defined below). We may exercise our option for the Optional
Album to be recorded and delivered to us during a Contract Period by
giving you reasonable, written notice of our election to do so at any
time prior to the expiration of that Contract Period. Each Album
required to be delivered to us in fulfillment of your Recording
Commitment is hereinafter sometimes referred to generally as a
"Required Album." Accordingly, you might be required to record for and
deliver to us as many as seven (7) Required Albums. The Required
Albums are sometimes referred to as the "First Album," "Second
Album,""Third Album," "Fourth Album," "Fifth Album," "Sixth Album,"
and "Seventh Album," respectively; and
(b) You shall deliver to us the First Album no later
than sixty (60) days after the date hereof. You shall deliver to us
the Optional Album, if any, during the Initial Period no sooner than
ten (10) and no later than twelve (12) months following delivery to us
of the First Album. During each Renewal Period, you shall deliver to
us the Required Album no later than three (3) months after the
commencement of the particular Renewal Period. You shall not without
our prior written consent, however, either (i) commence the recording
of any Masters for any Required Album prior to the date that is eight
(8) months after the date of your delivery to us of the
immediately-prior Required Album or (ii) deliver to us a Required
Album prior to the date that is ten (10) months after the date of your
delivery to us of the immediately-prior Required Album.
Notwithstanding anything to the contrary contained herein, you shall
deliver to us each Required Album as and when required hereunder so
that all seven (7) Required Albums are delivered to us within seven
(7) years after the date hereof.
4. Recording Procedures.
(a) You shall designate and submit to us for your and
our mutual approval the producer of each of the Masters, the Musical
Compositions or other Selections which shall be embodied in those
Masters, all other individuals rendering services in connection with
the recording of those Masters, the studios at which those Masters
shall be recorded, and the dates of recording of those Masters
(collectively referred to as "Recording Elements"). You shall also
prepare and submit to us for our approval a proposed budget for all
"Recording Costs" (as defined below) setting forth in such detail as
is reasonably required by us all costs and expenses to be paid or
incurred for the production, recording and delivery to us of the
Masters ("Recording Budget"). No recording sessions shall be commenced
nor shall any commitments be made or costs incurred hereunder with
respect to any Masters unless and until we shall have approved in
writing each Recording Element and the Recording Budget for those
Masters. If we shall disapprove of the Recording Budget submitted by
you, then our decision (including, at our election, our designation of
the Recording Budget
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in substitution for the Recording Budget submitted by you and
disapproved by us) shall be final;
(b) You shall furnish to us at such times as we shall
require all union contract forms, report forms, invoices and other
information that we shall require so that we promptly may pay all
Recording Costs, otherwise comply with any of our obligations in
connection with the Masters, release Phonograph Records embodying the
Masters and otherwise exploit the Masters;
(c) At our election, recording sessions for the
Masters shall be conducted under our or our designee's recording
license;
(d) Our representatives may attend recording sessions
for the Masters. The costs paid or incurred by our representatives to
attend recording sessions for the Masters shall be borne solely by us
and shall not be recoupable from royalties earned by you hereunder;
(e) You shall deliver to us the Masters promptly
after their completion. All original session tapes and any derivatives
or reproductions thereof shall be delivered to us concurrently, or, at
our election, maintained at a recording studio or other location
designated by us, in our name and subject to our control. Each Master
shall be subject to our approval as commercially and technically
satisfactory for the manufacture and sale of Phonograph Records, and,
upon our request, you shall re-record any Musical Composition or other
Selection until a Master that is commercially and technically
satisfactory to us shall have been obtained;
(f) Each Master shall embody your vocal and
instrumental performances as the sole featured artist of a single
Musical Composition and shall be newly-recorded in its entirety in a
recording studio. Accordingly, no Masters shall be recorded in whole
or in part at live concerts or other live performances. Each Required
Album shall embody recordings of no fewer than ten (10) and no more
than thirteen (13) Musical Compositions. You shall not record or
deliver hereunder nor shall we be obligated to accept Masters
constituting a Multiple Album. If, however, you shall do so and we
shall accept those Masters hereunder, then, at our election, for the
purpose of calculating the number of Masters recorded and delivered
hereunder, those Masters shall be deemed to constitute only one (1)
Album;
(g) Any Master Recording which is not recorded or
delivered in all respects in accordance with the terms hereof shall
not constitute a Master in fulfillment of your Recording Commitment,
unless we otherwise consent in writing or unless we actually
commercially exploit the Master Recording, in which event that Master
Recording that is commercially exploited by us in our sole discretion
shall constitute a Master, provided, however, that you agree that
Master
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Recordings delivered by you to us as so-called "B-sides" and used as
such shall not apply towards the fulfillment of your Recording
Commitment. Notwithstanding anything to the contrary contained in the
immediately preceding sentence, our commercial exploitation of a
Master Recording which was not recorded or delivered in all respects
in accordance with the terms hereof shall not relieve you of your
obligation to provide us with all necessary consents, approvals and
other delivery materials required by us under this Contract
(including, without limitation, the materials set forth in
subparagraph 18(i) below) for the release of Phonograph Records
embodying that Master Recording and for the manufacture of album
covers or other packaging therefor, and all of your representations,
warranties and covenants hereunder, as well as the provisions of
paragraph 19 below, shall continue to apply with respect to that
Master Recording. Furthermore, if we shall make any payments with
respect to any Master Recording which is not recorded for or delivered
to us in all respects in accordance with the terms hereof, you shall
pay to us, upon our demand, the amount thereof and, without limiting
our other rights and remedies, we may deduct that amount paid or
incurred by us for any reason from any monies payable by us hereunder;
and
(h) If for any reason you delay the commencement of
or are unavailable for any recording sessions for the Masters, you
shall pay us, upon our demand, an amount equal to the expenses or
charges paid or incurred by us by reason thereof. Without limiting our
other rights and remedies, we may deduct that amount paid or incurred
by us for any reason from any monies payable by us hereunder.
Notwithstanding anything to the contrary contained in this
subparagraph (h), we shall not demand you to pay to us the amount of
any expenses or charges paid or incurred by us by reason of your
delaying the commencement of or unavailability for any recording
sessions if such expenses or charges were due to any reason which was
beyond your reasonable control, or which you could not have reasonably
avoided; provided, however, that we shall have the right to deduct the
amount of any such expenses or charges paid or incurred by us from any
monies payable by us hereunder.
5. Recording Costs.
(a) We shall pay the Recording Costs of those
Masters recorded at recording sessions conducted in accordance with
the terms hereof in an amount not in excess of the approved Recording
Budget. If the Recording Costs of any Masters shall exceed the
Recording Budget therefor designated by us or approved by us in
writing, you shall be solely responsible for and shall pay promptly
the excess. If, however, we pay the excess, you shall pay to us, upon
our demand, the amount thereof and, without limiting our other rights
and remedies, we may deduct all such amounts paid or incurred by us
for any reason from any monies payable by us hereunder. You shall be
solely responsible for and shall pay any payments to any individuals
rendering services in connection
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with the recording of the Masters which exceed union scale unless the
excess and the recipient thereof shall have been specified in the
approved Recording Budget. You shall also be solely responsible for
and shall pay any penalties incurred for late payments caused by your
delay in submitting union contracts forms, report forms, or invoices
or other documents. If, however, we pay any excess not approved by us
in writing or any penalties, you shall pay to us, upon our demand, the
amount thereof, and, without limiting our other rights and remedies,
we may deduct that amount from any monies payable by us hereunder; and
(b) The term "Recording Costs" shall include, without
limitation, all minimum union scale payments made to you, all payments
made to any other individuals rendering services in connection with
the production and recording of the Masters (including, without
limitation, the individual producers and co-producers of the Masters),
all other payments which are made pursuant to any applicable law or
regulation or the provisions of any collective bargaining agreement
between us and any union or guild (including, without limitation,
payroll taxes and payments to union pension and welfare funds and/or
health and retirement funds), all amounts paid or incurred for studio
or hall rentals, tape, engineering, editing, mixing, remixing,
instrument rentals and cartage, mastering, transportation and
accommodations, immigration clearances, trademark and service mark
searches and clearances, any so-called "per diems" for any individuals
(including you) rendering services in connection with the recording of
the Masters, together with all other amounts paid or incurred in
connection with the production, recording and delivery to us of the
Masters. Recording Costs shall be recoupable from royalties payable by
us hereunder. Notwithstanding the foregoing, royalties payable by us
to the AF of M Music Performance Trust Fund or Special Payments Fund
or any sums payable solely in respect of the sale of Phonograph
Records hereunder to any union or union trust fund or similar fund
based on Record sales shall not be deemed to be Recording Costs and
shall not be recoupable hereunder.
6. Rights.
(a) All Master Recordings and Audio-Visual Recordings
recorded during the Term which embody your performances, from the
inception of the recording thereof, and all artwork created for use in
connection with any reproduction thereof ("Artwork") shall be deemed,
for purposes of copyright law throughout the universe, works made for
hire for us by you and all other persons rendering services in
connection with those Master Recordings, Audio-Visual Recordings and
Artwork as our employees for hire. Those Master Recordings and
Audio-Visual Recordings, from the inception of the recording thereof,
and all Phonograph Records and other reproductions made therefrom,
together with the performances embodied therein and all copyrights
therein and thereto and all renewals and extensions thereof, and all
Artwork and all copyrights in and to all
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Artwork and all renewals and extensions thereof, shall be entirely our
property throughout the universe, free of any claims whatsoever by you
or any other person, firm, or corporation. Accordingly, we shall have
the exclusive right to obtain registration of copyright (and all
renewals and extensions) throughout the universe in those Master
Recordings, Audio-Visual Recordings and Artwork in our name, as the
owner and author thereof. If for any reason we shall be deemed not to
be the author of those Master Recordings, Audio-Visual Recordings or
Artwork, this Contract shall constitute an irrevocable transfer to us
of ownership of copyright (and all renewals and extensions) throughout
the universe in those Master Recordings, Audio-Visual Recordings or
Artwork (as applicable) and, accordingly, you hereby grant, transfer,
convey and assign directly to us the entire right, title and interest
throughout the universe, including, without limitation, the copyright,
the right to secure copyright registration and any and all copyright
renewal rights, in and to all Master Recordings and Audio-Visual
Recordings recorded during the Term which embody your performances and
in and to all Artwork;
(b) You shall, upon our request, cause to be executed
and delivered to us transfers of ownership of copyright (and all
renewals and extensions) in those Master Recordings, Audio-Visual
Recordings and Artwork and any other documents as we may reasonably
deem necessary or appropriate to vest in us the rights granted to us
in this Contract, and you hereby irrevocably appoint us your
attorney-in-fact for the purpose of executing those transfers of
ownership and other documents in your names. We shall not, however,
exercise the power of attorney granted to us in this subparagraph 6(b)
unless and until you shall have failed to execute and deliver to us
those instruments of transfer of copyright and/or any other documents
within five (5) days after your receipt of our request therefor;
(c) Without limiting the generality of the foregoing,
we and any person, firm, or corporation designated by us shall have
the exclusive, perpetual right throughout the universe to manufacture,
sell, distribute and advertise Phonograph Records, Audio-Visual
Records and other reproductions embodying those Master Recordings or
Audio-Visual Recordings under any trademarks, trade names or labels,
and to lease, license, convey and otherwise exploit and use those
Master Recordings by any method (whether now known or unknown) and in
any medium (whether now known or unknown) and to perform publicly
Phonograph Records, Audio-Visual Records and other reproductions
embodying those Master Recordings or Audio-Visual Recordings, all upon
such terms as we may approve, or we may refrain from doing any or all
of the foregoing;
(d) If you are entitled to any reversion of the
copyright or other right, title and interest in and to Masters (or any
of them) pursuant to the laws of the United States or any other
country of the world, and that reversion is effected, then you hereby
irrevocably license to us exclusively the entire
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worldwide right, title and interest, including, without limitation,
the copyright in and to any such Master so acquired by you pursuant to
the laws of the United States or any other country of the world, all
for the duration of the copyright (and any renewals or extensions
thereof) in and to such Master ("License Period"). In that event, we
and any person, firm or corporation designated by us shall have the
exclusive right throughout the universe during the License Period to
manufacture, sell, distribute and advertise Phonograph Records,
Audio-Visual Records and other reproductions embodying the Masters or
Audio-Visual Recordings under any trademarks, trade names or labels or
to lease, license, convey and otherwise exploit and use those Masters
or Audio-Visual Recordings by any method (whether now known or
unknown) and in any medium (whether now known or unknown) and to
perform publicly Phonograph Records, Audio-Visual Recordings and other
reproductions embodying the Masters or Audio-Visual Recordings all
upon such terms as we may approve, or we may refrain from doing any or
all of the foregoing, all in accordance with the provisions of this
Contract. We shall have no obligation to pay to you any monies in
connection with the grant set forth in this subparagraph 6(d) except
that we shall continue to credit to your royalty account hereunder
royalties earned by you in accordance with the provisions hereof on
exploitations of the Masters occurring during the License Period as if
we had continued to own the entirety of all right, title and interest,
including, without limitation, the copyright in and to the Masters or
Audio-Visual Record Recordings in accordance with the provisions of
subparagraph 6(a), (b) and (c) above. You expressly acknowledge and
agree that no provision of any applicable law, rule or regulation
(including, without limitation, the copyright laws and regulations of
the United States or Canada) permits you to terminate the transfer,
grant, conveyance or assignment to us of the copyright in and to
Master Recordings or Audio-Visual Recordings provided in this
paragraph 6 or any other reversion of the copyright or other right,
title and interest in and to the Masters. If any such law, rule or
regulation shall apply at any time after the date hereof, you shall
not exercise any rights pursuant to that law, rule or regulation;
(e) All matters relating to trademarks, notices,
including, without limitation, UPC symbols (i.e., barcoding), or
disclosures deemed advisable by us or our attorneys, and any matter
other than the cover layout and the picture of the art to be used on
the particular Required Album will be determined by us in our sole
discretion; and
(f) Notwithstanding anything to the contrary
contained herein, provided that you are not in breach of the material
terms hereof which as of the date in question were required to have
then been performed:
(i) We shall not during the Term in the
United States sell or license for sale Phonograph Records
embodying Masters as premiums without your prior consent,
which you shall not unreasonably withhold;
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(ii) The initial commercial release through
Normal Retail Distribution Channels in the United States, if
any, of each Required Album shall be on our then-current
so-called "top pop" label;
(iii) During the Term in the United States,
we shall not reproduce or exploit commercially on Phonograph
Records any so-called "outtakes" of Master Recordings without
your prior consent, which you shall not unreasonably
withhold; and
(iv) During the Term, we shall not use or
authorize the use of any Master in the soundtrack of any
theatrical motion picture which is then-currently rated "X"
or "NC-17" by the Motion Picture Association of America
without your prior consent, which you shall not unreasonably
withhold.
7. Name and Likeness.
(a) (i) We and any person, firm or corporation
designated by us shall have the perpetual, worldwide right to
use and to permit others to use your name (both legal and
professional, and whether presently or hereafter used by
you), likeness, and other identification, and biographical
material concerning you, and the name and likeness of any
producer rendering services in connection with Master
Recordings recorded by you during the Term for purposes of
trade and advertising. We shall have the further right to
refer to you during the Term as our exclusive recording
artist and you in your activities in the entertainment field
shall use reasonable efforts to be billed and advertised
during the Term as our exclusive recording artist. The rights
granted to us pursuant to this subparagraph 7(a) with respect
to your name, likeness, other identification and biographical
material concerning you shall be exclusive during the Term
and nonexclusive thereafter. Accordingly, but without
limiting the generality of the foregoing, you shall not
authorize or permit any person, firm, or corporation other
than us to use during the Term your legal or professional
name or your likeness in connection with the advertising or
sale of Phonograph Records. Notwithstanding anything to the
contrary contained herein, during the Term, you shall not use
any name other than the professional name utilized by you as
of the date of this Contract without first obtaining our
prior written consent thereto;
(ii) During the Term, you shall submit to us
or we shall make available to you at our offices in New York,
New York for your inspection, photographs of you and
biographies concerning you for use in connection with the
exploitation of Masters. Notwithstanding anything to the
contrary contained herein, we shall not use any photographs
of you or biographies concerning you in connection with our
exploitation of
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Masters in the United States unless those photographs and
biographies shall have been either submitted or approved by
you hereunder, which approval you shall not withhold
unreasonably. If you shall fail to submit to us sufficient
photographs and biographies and if we shall have failed to
receive your written notice of your objection to the
photographs and biographies made available to you within five
(5) business days after we shall have made them available to
you for your inspection, we shall be free to utilize such
photographs and biographies as we shall reasonably require in
connection with our exploitation of Masters; and
(iii) In connection with the initial release
in the United States of any Required Album during the Term,
you shall have the right to review and approve the "Artwork"
defined in paragraph 6 above that we intend to use on the
front cover of the packaging for each Required Album as
initially released in the United States on the terms and
conditions set forth in this subparagraph. Within a reasonable
time after our receipt of your written request therefor, we
shall inform you of the status of any Artwork that we
then-currently intend to use initially on the front cover of
the packaging for each Required Album as initially released in
the United States during the Term. Nothing contained in this
Contract or otherwise, however, shall obligate us to obtain
your approval of any Artwork hereunder later than five (5)
business days after that Artwork is made available to you for
your review in accordance with subparagraph (ii) above if to
do so after the five (5) business day period would delay or
reasonably threaten to delay our release or scheduled release
of a Required Album embodying the Artwork. You shall have the
right to approve of that Artwork that we intend to use on the
front cover of the packaging of the particular Required Album
as initially released in the United States on the same terms
and conditions that you have the right to review and approve
photographs and biographical materials concerning you
pursuant to the provisions of subparagraph (ii) above. Your
disapproval of any Artwork shall not be based on the per-unit
manufacturing cost of the Artwork for any Album hereunder or
on the initial cost to create the Artwork for any particular
Album hereunder. We shall have no obligation hereunder or
otherwise, with or without your approval, to utilize any
Artwork on any Albums embodying Masters if the per-unit
manufacturing costs of that Artwork on each Album would exceed
our then-current, standard per-unit manufacturing costs of
artwork used for Albums in our catalogue generally;
(b) You are the sole owner of each professional name
used by you during the Term and no other person, firm or corporation
has or will have the right to use that name in connection with
Phonograph Records during the Term. We shall have the right, at our
election, to cause a search to be instituted to determine whether
there have been any third party uses of any names used by
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you for Phonograph Record purposes. Further, we shall have the right,
at our election, to apply for registration of your name to be made in
favor of you for Phonograph Record and/or other entertainment purposes
in the United States Patent and Trademark Office or such other federal
institution as may then be charged with accepting those registrations.
Any amounts paid by us in connection with any search or registration
shall be deemed to be Recording Costs pursuant to subparagraph 5(b)
above. If any search undertaken by us indicates or leads us reasonably
to believe that your name should not be used hereunder, then you and
we shall determine mutually a substitute name to be used by you.
Nothing contained herein shall release you from your indemnification
of us in respect of our use of any of your names, whether legal or
professional or otherwise; and
(c) (i) As used herein, the term "Merchandising
Agreement" shall mean an agreement pursuant to which you or
an entity on your behalf ("Grantor") sell, transfer, convey,
assign, license, or otherwise dispose of any right to
reproduce and/or exploit your name, likeness, or logo, or
other materials concerning you on or in connection with any
products or services, other than Phonograph Records, which
are intended to be sold to the public through retail outlets,
at tour venues or otherwise. The term "Merchandising
Agreement" shall not include any agreement whose subject
matter is the commercial endorsement of any product or
service not embodying your name, likeness or logo of you.
Prior to the commencement of negotiations between Grantor and
any third party, you shall notify us of Grantor's desire or
intention to commence negotiations to enter into a
Merchandising Agreement. We shall have the right, at our
election, at any time within one hundred twenty (120) days
after our receipt of that notice from you, to cause Grantor
immediately to enter into good faith negotiations with us
concerning the terms and conditions of a Merchandising
Agreement. If for any reason we and Grantor are unable to
agree on the terms and conditions of a Merchandising
Agreement within thirty (30) days after our notice to you
requesting the commencement of those good faith negotiations,
then Grantor shall have the right to enter into negotiations
for a Merchandising Agreement with any third party, subject
to the provisions of subparagraph 7(c)(ii) below;
(ii) Prior to Grantor entering into any
Merchandising Agreement, you shall cause Grantor to first
offer to us the right to enter into a Merchandising Agreement
with Grantor for the same bona fide advance and pursuant to
the same bona fide terms as may be offered by Grantor to a
responsible, unrelated third party. The terms of any such
offer shall, however, provide only for the payment to Grantor
of cash in a lump sum or installments. You shall give us
written notice of any such bona fide and acceptable offer
which sets forth the name of the prospective merchandiser,
the advance and all other terms and conditions
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of the offer. If we fail to notify you that we are exercising
our option to enter into a Merchandising Agreement with
Grantor within thirty (30) days after our actual receipt of
your written notice to us, then Grantor shall have the right
to enter into a Merchandising Agreement with the prospective
merchandiser, provided that the terms of that Merchandising
Agreement are the same as the terms set forth in your written
notice to us. If, however, Grantor does not enter into and
execute written documentation of that Merchandising Agreement
with the prospective merchandiser within sixty (60) days
after our failure to give you notice as set forth in this
subparagraph 7(c)(ii), then you shall repeat the procedure
set forth in this subparagraph 7(c)(ii) prior to Grantor
entering into a Merchandising Agreement with any third party;
and
(iii) Without limiting the generality of any
of our rights herein, nothing contained in the foregoing
provisions of this subparagraph 7(c) is intended to grant,
license or assign to you any right in or to any Artwork
whether or not used on or in connection with the sale of
Phonograph Records hereunder, all of which are hereby
expressly reserved.
8. Advances. We shall pay to you as advances recoupable from
royalties earned by you hereunder the following amounts for the following
Required Albums payable at the following times:
(a) For the First Album, the Recording Fund shall be
Two Hundred Fifty Thousand Dollars ($250,000), Fifty Thousand Dollars
($50,000) of which shall be payable promptly after the execution of
this Contract ("Execution Advance"). The "Fund Balance" (defined
below) shall be payable promptly after the "Delivery Date" (defined
below) for the First Album. On your behalf, you hereby irrevocably
request, authorize and direct us to pay to and in time name of CIW2,
Inc. (federal tax identification number 95-4457790) Ten Thousand
Dollars ($10,000) of the Execution Advance; and
(b) For each Required Album other than the First
Album: (A) the "Pre-Delivery Payment" (defined below), payable
promptly after our receipt of your written notice indicating that
recording sessions for the Required Album for which the advance is
payable have actually commenced in accordance with all of the terms of
this Contract (including, without limitation, the provisions of
subparagraph 4(a) above); and (B) the Fund Balance (defined below),
payable promptly after the Delivery Date (defined below). For each
Required Album, if any, after the First Album, the Recording Fund
shall be the "Formula Amount" (defined below), but no less than the
"Minimum Amount" and no more than the "Maximum Amount" set forth in
the Schedule below:
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SCHEDULE
The "Formula Amount" for the Second Album shall mean an amount equal to
two-thirds (2/3) of the royalties (after retention of reserves) earned by you
hereunder from Net Sales through Normal Retail Distribution Channels in the
United States of the First Album, computed as of end of the applicable "Fund
Calculation Period" (defined below) and for each Required Album after the Second
Album shall mean an amount equal to the product of (i) one-half (1/2) and (ii)
two-thirds (2/3) of the royalties (after retention of reserves) earned by you
hereunder from Net Sales through Normal Retail Distribution Channels in the
United States of the two (2) Required Albums initially released immediately
prior to the Required Album for which the Formula Amount is being calculated,
computed as of the end of the applicable Fund Calculation Period for the
Required Albums in question. The term "Fund Calculation Period" shall mean the
period commencing on date of the initial commercial release in the United States
of the Required Album for which royalty earnings are being computed and ending
on the date twelve (12) months thereafter;
(c) The term "Pre-Delivery Payment" shall mean an
amount equal to ten percent (10%) of the "Minimum Amount" for the
applicable Required Album set forth in the Schedule above. The term
"Fund Balance" shall mean the amount by which the Recording Fund
exceeds the aggregate of the Recording Costs for the applicable
Required Album, the Pre-Delivery Payment for the applicable Required
Album (or the Execution Advance with respect to the First Album) and
any other advances paid in connection with the applicable Required
Album. The term "Delivery Date" shall mean the later of the date of
your delivery to us of all Masters constituting the applicable
Required Album in accordance with all of the terms of this Contract
and the date on which we determine the aggregate Recording Costs for
that Required Album; and
(d) You acknowledge and agree that any and all
advances paid by us hereunder shall constitute prepayment of session
union scale to you, and you agree to timely complete and appropriately
deliver any documentation required by the applicable union to document
and effectuate each such prepayment.
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9. Royalties.
(a) In consideration of our copyright ownership set
forth herein, any rights licensed to us herein, our right to use your
name, likeness and biographical materials as provided herein, and the
other agreements, representations and warranties contained herein, on
Net Sales of Phonograph Records embodying Masters, we shall pay to you
a royalty computed by multiplying the Royalty Base Price, less the
deductions hereafter provided, by the applicable royalty rate set
forth below:
(i) On Phonograph Records sold in the United
States the royalty rate shall be:
(A) (1) Thirteen percent (13%) on Albums;
(2) The royalty rate
pursuant to subparagraph 9(a)(i)(A)(1) above
on Net Sales through Normal Retail
Distribution Channels in the United States
("Qualifying Sales) of a particular Required
Album embodying solely newly-recorded
Masters in the form of Conventional cassette
tapes and Compact Discs ("Qualifying
Album") which exceed five hundred thousand
(500,000) units, but which do not exceed one
million (1,000,000) units, shall be the
royalty rate set forth in that subparagraph,
plus one-half percent (.50%). The royalty
rate pursuant to subparagraph 9(a)(i)(A)(1)
above on Qualifying Sales of a particular
Qualifying Album in the United States which
exceed one million (1,000,000) units shall
be the royalty rate set forth in that
subparagraph (without regard to the
operation of the provisions of this
subparagraph 9(a)(i)(A)(2)) plus one percent
(1%). Any increases in the royalty rate set
forth in subparagraph 9(a)(i)(A)(1) above
resulting from the operation of the
provisions of this subparagraph
9(a)(i)(A)(2) shall be disregarded for the
purpose of computing any other royalty rates
pursuant to this paragraph 9 which apply to
sales of Records outside the United States
or which are a percentage of or otherwise
based upon the royalty rate set forth in
subparagraph 9(a)(i)(A)(1) above; and
(B) Ten percent (10%) on Singles;
(ii) On Phonograph Records sold in Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Greece, Holland,
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Italy, Japan, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, or the United Kingdom, the royalty rate shall be:
(A) Nine percent (9%) on Albums; and
(B) Seven and one-half percent (7.50%) on
Singles;
(iii) On Phonograph Records sold outside the
United States and those countries set forth in subparagraph
9(a)(ii) above, the royalty rate shall be:
(A) Seven and twenty one-hundredths
percent (7.20%) on Albums; and
(B) Six percent (6%) on Singles;
(b) Notwithstanding the foregoing:
(i) (A) On Phonograph Records sold through a
direct mail or mail order distribution method
(including without limitation through so-called
"record clubs"), or through any combination of the
foregoing, the royalty rate shall be one-half(1/2)
of the otherwise applicable royalty rate, but in no
event shall your royalty in respect of those sales
exceed an amount equal to fifty percent (50%) of the
Net Receipts from the sale of those Phonograph
Records (whether or not sold by an affiliate of
ours);
(B) On Phonograph Records sold through
retail stores in connection with special radio or
television advertisements (sometimes referred to as
"key outlet marketing") ("Key Outlet Campaign")
whether alone or in combination with any direct
mail or mail order distribution method, the royalty
rate shall be one hundred percent (100%) of the
otherwise applicable royalty rate and
notwithstanding anything to the contrary herein, we
shall have the right to recoup fifty percent (50%)
of any and all of the costs paid or incurred by us
or our licensees in respect of such Key Outlet
Campaigns from any and all royalties earned by you
under this Contract;
(ii) On Phonograph Records sold for use as
premiums or in connection with the sale, advertising, or
promotion of any other product or service, the royalty rate
shall be one-half (1/2) of the otherwise applicable royalty
rate and the Royalty Base Price of those Phonograph Records
shall be deemed to be an amount equal to the monies actually
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received by us from the sale of those Phonograph Records,
unless manufactured and sold by an affiliate or licensee of
ours, in which event the Royalty Base Price shall be deemed to
be the price used by that affiliate or licensee in accounting
to us;
(iii) (A) On Mid-Price Records the royalty
rate shall be two-thirds (2/3) of the otherwise
applicable royalty rate, and on Budget Records the
royalty rate shall be one-half (1/2) of the otherwise
applicable royalty rate;
(B) Notwithstanding the foregoing, we
shall not, during the Term without your prior written
consent, reduce the royalty rate specified in
subparagraph 9(a)(i) above payable to you hereunder
on Net Sales through Normal Retail Distribution
Channels in the United States of any Required Album
solely because we sell that Required Album as a
Mid-Price Record in the United States prior to the
date that is twelve (12) months after the date of the
initial release through Normal Retail Distribution
Channels in the United States of that Required Album.
Further, we shall not, during the Term without your
prior written consent, reduce the royalty rate
specified in subparagraph 9(a)(i) above payable to
you hereunder on Net Sales through Normal Retail
Distribution Channels in the United States of any
Required Album solely because we sell that Required
Album as a Budget Record in the United States prior
to the date that is eighteen (18) months after the
date of the initial release through Normal Retail
Distribution Channels in the United States of that
Required Album;
(iv) On Phonograph Records sold to the
United States Government, its subdivisions, departments or
agencies (including Phonograph Records sold for resale through
military facilities) or to educational institutions or
libraries, the royalty rate shall be one-half (1/2) of the
otherwise applicable royalty rate;
(v) On Long-Play Singles, the royalty rate
shall be one half (1/2) of the otherwise applicable royalty
rate for Albums, and on EPs the royalty rate shall be
two-thirds (2/3) of the otherwise applicable royalty rate for
Albums;
(vi) On Multiple Albums, the royalty rate
shall be the lesser of: (A) the otherwise applicable royalty
rate and (B) the otherwise applicable royalty rate multiplied
by a fraction, the numerator of which is the Royalty Base
Price of the Multiple Album and the denominator of which is
the product of the Royalty Base Price of a top-line
single-disc
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Album in the configuration in question and the number of
discs contained in the Multiple Album;
(vii) On Phonograph Records in the form of
Digital Records the royalty rate shall be:
(A) Eighty percent (80%) of the
otherwise applicable royalty rate for all Digital
Records other than Compact Discs;
(B) One hundred percent (100%) of
the otherwise applicable royalty rate on Compact
Discs;
(viii) On Masters licensed by us to others
for their manufacture and sale of Phonograph Records or for
any other uses (other than those for which a royalty is
payable in accordance with subparagraph (ix)(B) below), your
royalty shall be an amount equal to fifty percent (50%) of our
Net Receipts from the sale of those Phonograph Records or from
those other uses of the Masters;
(ix) On Audio-Visual Recordings embodying
your performances, your royalty shall be as follows:
(A) On Audio-Visual Records your
royalty shall be computed in accordance with the
provisions of this paragraph 9 applicable to Albums,
except on sales of Audio-Visual Records in the United
States the royalty rate pursuant to subparagraph
9(a)(i) above shall be deemed to be twenty percent
(20%) and on sales of Audio-Visual Records outside of
the United States the royalty rate pursuant to
subparagraphs 9(a)(ii) and 9(a)(iii) above shall be
deemed to be fifteen percent (15%). Notwithstanding
anything to the contrary contained herein, the
royalty payable to you pursuant to this subparagraph
(ix)(A) on the exploitation of Audio-Visual
Recordings in the United States or Canada shall be
inclusive of any royalties or other monies required
to be paid or incurred by us (or otherwise deducted
from monies payable to us) to any person, firm or
corporation for the synchronization, reproduction
and/or public performance of any Selection in the
Audio-Visual Recording in question and, without
limiting any of our other rights or remedies
hereunder or otherwise, we shall have the right to
deduct from the royalty payable to you pursuant to
this subparagraph (ix)(A) an amount equal to those
sums required to be paid to any person, firm or
corporation in connection therewith;
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(B) On Audio-Visual Records
manufactured and sold by a non-affiliated licensee
of ours, however, in the United States or elsewhere,
your royalty shall be an amount equal to fifty
percent (50%) of our Net Receipts from the sale of
those Audio-Visual Records (rather than the royalty
computed in accordance with the immediately
preceding subparagraph (A));
(C) Notwithstanding anything to the
contrary contained herein, the exploitation of
Audio-Visual Recordings by means of any so-called
"video jukebox" shall be deemed to be non-royalty
bearing and promotional in nature for all purposes
of this Contract; and
(D) On Mid-Price Audio-Visual
Records the royalty rate shall be two-thirds (2/3) of
the otherwise applicable royalty rate, and on Budget
Audio-Visual Records the royalty rate shall be
one-half (1/2) of the otherwise applicable royalty
rate;
(x) On New Records your royalty shall
be the lesser of the following:
(A) Seventy-five percent (75%) of
the otherwise applicable royalty rate applied to the
Royalty Base Price of the New Record concerned;
(B) An amount equal to the product
of (1) our Net Receipts from the exploitation of
those New Records, and (2) the otherwise applicable
royalty rate; and
(C) Notwithstanding the foregoing,
promptly after our receipt during the Term of your
written request therefor (which request shall not be
made prior to the date that is three (3) years after
the initial commercial release of a Required Album
hereunder in a particular configuration of a New
Record through Normal Retail Distribution Channels
in the United States and shall not be made more than
once at any time with respect to a particular
configuration of a New Record), we shall consider in
good faith (based on our then-current general
policies) your request that you and we-renegotiate
the percentage of the otherwise applicable royalty
rate (as opposed to the method of calculating the
royalty) for sales of New Records in that particular
configuration hereunder. Pending our determination,
the percentage of the otherwise applicable royalty
rate for sales of New Records in that particular
configuration shall be the percentage of the
otherwise applicable royalty rate set forth in
subparagraphs 9(b)(x)(A) or (B) above and
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we shall continue to have the right to manufacture
and distribute those New Records. Further, we shall
have no obligation to consider any request made by
you that the percentage of the otherwise applicable
royalty rate for sales of New Records in any
configuration exceed one hundred percent (100%) of
the otherwise applicable royalty rate hereunder;
(c) Notwithstanding the foregoing:
(i) No royalties shall be payable on
Phonograph Records furnished as free or bonus Phonograph
Records to members, applicants, or other participants in any
record club or other direct mail distribution method; on
Phonograph Records distributed for promotional purposes to
radio stations, television stations or networks, record
reviewers, or other customary recipients of promotional
Phonograph Records; on so-called "promotional sampler"
Phonograph Records; on Phonograph Records sold as scrap or as
"cut-outs"; or on Phonograph Records (whether or not intended
for sale by the recipient) furnished on a no-charge or free
basis (such as, but not limited to, Phonograph Records
commonly described in the record industry as "free goods" or
"freebies") or sold at less than fifty percent (50%) of their
regular wholesale price to distributors, subdistributors,
dealers, or others, whether or not the recipients thereof are
affiliated with us. We shall not distribute Phonograph
Records embodying solely Masters in the United States at
no-charge for sale by the recipient thereof other than in
accordance with our then-current general policy applicable at
the time of our distribution of those Records which, in the
United States on the date of this Contract is the
distribution of the following Phonograph Records at no charge
intended for sale by the recipient thereof (1) on a regular
basis, as follows: Fifteen (15) Albums and EPs in the form of
Conventional vinyl discs and cassette tapes for each
eighty-five (85) of those Albums and EPs sold (that is,
fifteen (15) Albums and EPs in the form of conventional vinyl
discs and cassette tapes are distributed at no charge out of
each one hundred (100) of those Albums and EPs distributed
for sale by the recipient thereof); twenty (20) Albums and
EPs in the form of Digital Records (including, without
limitation, Compact Discs) for each eighty (80) of those
Albums sold (that is, twenty (20) Albums in the form of
Digital Records are distributed at no charge out of each one
hundred (100) of those Albums distributed for sale by the
recipient thereof); and thirty (30) Singles and Long-Play
Singles in all forms and configurations for each seventy (70)
Singles and Long-Play Singles sold in any form or
configuration (that is, thirty (30) Singles and Long-Play
Singles in all forms and configurations are distributed at no
charge out of each one hundred (100) Singles and Long-Play
Singles distributed in any form or configuration for sale by
the recipient thereof); and thirty (30) Phonograph Records
other than Albums,
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EPs, Singles and Long-Play Singles, if any, for each seventy
(70) of those Phonograph Records sold in any form or
configuration (that is, thirty (30) Phonograph Records other
than Albums, EPs, Singles and Long-Play Singles, if any, are
or would be distributed at no charge out of each one hundred
(100) of those Phonograph Records distributed for sale by the
recipient thereof); and (2), from time to time in connection
with short-term or other special sales programs of limited
duration, such additional Records as we in the exercise of our
business judgment determine. We shall distribute Phonograph
Records in the form of New Records embodying solely Masters in
the United States at no-charge for sale by the recipient
thereof in accordance with our then-current general policy
applicable to Compact Discs at the time of our distribution of
those Records;
(ii) Royalties on Phonograph Records
(whether or not intended for sale by the recipient thereof)
sold at a discount to distributors, subdistributors, dealers,
or others, whether or not affiliated with us (except for
Phonograph Records sold at less than fifty percent (50%) of
their regular wholesale price, for which no royalties are
payable hereunder) shall be reduced in the same proportion as
the regular wholesale price of those Phonograph Records is
reduced on those sales;
(iii) For purposes of computing royalties,
there shall be deducted from the Royalty Base Price (or
other applicable price, if any, upon which royalties are
calculated) of Phonograph Records hereunder an amount equal
to twenty percent (20%) thereof for all Phonograph Records in
the form of Conventional cassette tapes; and twenty-five
percent (25%) thereof for Phonograph Records in all other
forms, whether now known or hereafter devised;
(iv) Phonograph Records distributed by any
of our affiliates shall be deemed sold for the purposes of
this Contract only if sold by that affiliate to one of its
independent third party customers and final payment is
received therefor by us in United States Dollars in the
United States;
(v) The royalty payable to you hereunder on
a Phonograph Record or other device embodying Masters
together with other Master Recordings shall be computed by
multiplying the otherwise applicable royalty rate by the
"Reduction Factor." As used herein, the term "Reduction
Factor" shall mean, at our election, (A) a fraction, the
numerator of which shall be the number of Selections
contained on the Masters which are embodied on that
Phonograph Record or other device and the denominator of
which shall be the total number of Selections embodied on
that Phonograph Record or other device or (B) a fraction,
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the numerator of which shall be the playing time of the
Selections contained on the Masters which are embodied on that
Phonograph Record or other device and the denominator of which
shall be the total playing time of the Phonograph Record or
other device in question. For any Phonograph Record or other
device for which a finite running or playing time does not
exist, the running or playing time of that Phonograph Record
or other device shall be deemed to be one hundred twenty (120)
minutes; and
(vi) The royalty payable to you hereunder and
the Recording Costs hereunder on a Master embodying your
performances jointly with any other artist or musician to whom
we are obligated to pay a royalty in respect of that Master
shall be computed by multiplying the otherwise applicable
royalty rate and Recording Costs by a fraction, the numerator
of which shall be one (1) and the denominator of which shall
be the sum of one (1) and the total number of other artists or
musicians whose performances are embodied on that Master to
whom we are obligated to pay a royalty in respect of that
Master; and
(d) You hereby expressly authorize us and our
licensees to collect and receive on your behalf any royalties or other
monies which may be payable in the United States pursuant to the Audio
Home Recording Act allocable to featured performers and which is
otherwise determined to be payable to you in respect of your
performances in Masters ("AHRA Monies"). We shall credit to your
account that portion of AHRA Monies received by us which is
specifically allocable to Masters and otherwise payable to you (less
any portion thereof which may be payable to any third party,
including, without limitation, any producer of Masters). You shall
execute any further documentation which we reasonably deem necessary
or desirable to effectuate the foregoing provisions of this
subparagraph (d). Without limiting the foregoing, you shall not have
the right hereunder or otherwise to be paid or to have credited to
your account any portion of AHRA Monies received by us or otherwise
received on our behalf pursuant to the Audio Home Recording Act which
is allocable to the owner of the sound recording.
10. Royalty Payments and Accountings.
(a) We shall send to you statements for royalties
payable hereunder on or before the date ninety (90) days after the end
of each of our then-current semi-annual accounting periods (currently
ending on June 30 and December 31), together with payment of
royalties, if any, earned by you hereunder during the semi-annual
period for which the statement is rendered (based on our receipts in
the United States during the accounting period for which the statement
is rendered), less all advances and charges under this Contract.
Notwithstanding the foregoing, after the Term, no royalty statement
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shall be required to be rendered for any semi-annual accounting period
in which less than Seven Thousand Five Hundred Dollars ($7,500) in
royalties are credited to your account (whether by exploitation of
Masters or liquidation of reserves) unless (i) royalties are otherwise
actually payable to you for that semi-annual accounting period; or
(ii) you notify us in writing of your request that we render to you a
statement for the semi-annual accounting period in which we receive
that request on the date otherwise required hereunder. We shall have
the right to retain, as a reserve against charges, credits, or
returns, such portion of payable royalties as shall be reasonable in
our best business judgment. Promptly after your written request
therefor referring specifically to this subparagraph 10(a), which you
may render to us not more than once during each semi-annual accounting
period hereunder, we shall consult with you regarding the amount of
reserves which we intend to retain for the semi-annual accounting
period in question, provided that our failure to do so shall not
constitute a breach hereof. Our decision with respect thereto,
however, shall be final. We shall liquidate each reserve retained by
us as shall be reasonable in our best business judgment but not later
than the end of the fourth (4th) semi-annual accounting period
following that accounting period in which the reserve was initially
retained. Any accounting period in which returns exceed shipments of
Phonograph Records hereunder shall not be deemed to be one (1) of
those four (4) semi-annual accounting periods by the end of which a
particular reserve must be liquidated. You shall reimburse us on
demand for any overpayments, and we may also deduct the amount thereof
from any monies payable to you hereunder. Returns of Phonograph
Records distributed for sale in the United States shall be pro-rated
between Phonograph Records sold for which a Phonograph Record royalty
is payable hereunder and Phonograph Records distributed on a
"no-charge" or "free goods" basis for which no Phonograph Record
royalty is payable in the same proportion that those Phonograph
Records are initially invoiced. Royalties paid by us on Phonograph
Records subsequently returned shall be deemed overpayments;
(b) No royalties shall be payable to you on sales of
Phonograph Records or other exploitations of Masters by any of our
affiliates or licensees until payment on those sales has been received
by us in the United States. Sales or other exploitations by an
affiliate or licensee shall be deemed to have occurred in the
semi-annual accounting period during which that affiliate or licensee
shall have rendered to us and we shall have received in the United
States accounting statements and payments for those sales or other
exploitations of Masters;
(c) (i) Royalties on exploitations of Masters
outside of the United States shall be computed in the
national currency in which our licensees or affiliates or
other distributors pay us, shall be credited to your royalty
account hereunder at the same rate of exchange at which our
licensees or affiliates or other distributors pay us, and
shall be
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proportionately subject to any foreign withholding or
comparable taxes which may be imposed upon our receipts. You
shall not be entitled to any portion of a tax credit which
may be available to us or to any of our licensees or
affiliates in connection with any foreign taxes withheld from
our receipts, from the applicable price in computing the
Royalty Base Price, or from any other source; and
(ii) If we shall not receive payment in
United States dollars in the United States for any
exploitations of Masters outside of the United States,
royalties on those exploitations shall not be credited to
your royalty account hereunder. If all advances and other
recoupable charges under this Contract are then-currently
recouped and if we are able to do so, we shall accept payment
for those exploitations in foreign currency and shall deposit
in a foreign bank or other depository, at your expense, in
that foreign currency, that portion thereof, if any, as shall
equal the royalties which would have been payable to you
hereunder on those exploitations had payment for those
exploitations been made to us in United States dollars in the
United States. The foregoing deposit shall not be reflected
on your accounting statements hereunder. Deposit as aforesaid
shall fulfill our royalty obligations hereunder as to those
sales. If any law, ruling or other governmental restriction
limits the amount an affiliate or licensee can remit to us,
we may reduce your royalties hereunder by an amount
proportionate to the reduction in our affiliate's or
licensee's (as appropriate) remittance to us;
(d) You shall be deemed to have consented to all
royalty statements and all other accountings rendered or required to
be rendered by us hereunder and each royalty statement and other
accounting shall be conclusive, final, and binding, shall constitute
an account stated, and shall not be subject to any objection for any
reason whatsoever, unless you give us notice stating the specific
basis for that objection within two (2) years after the date rendered
or required to be rendered. You may not maintain any action, suit, or
proceeding of any nature against us in respect of any royalty
statement or other accounting rendered or required to be rendered by
us hereunder (or in respect of the accounting period to which it
relates or was to relate) unless you commence that action, suit, or
proceeding against us in a court of competent jurisdiction within two
(2) years after the date rendered or required to be rendered. If you
shall commence an action, suit, or proceeding against us concerning
royalty statements or other accountings rendered or required to be
rendered by us to you hereunder, the scope of that action, suit or
proceeding shall be limited to a determination of the amount of
royalties, if any, payable to you for the accounting periods in
question, and your sole remedy shall be the recovery of those
royalties;
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(e) We shall maintain books and records concerning
the sale of Phonograph Records hereunder. You shall have the right to
designate an independent certified public accountant on your behalf
(who shall not be compensated on a contingent fee basis), at your own
expense, to examine those books and records (but not any of our books
or records relating to the manufacture of Phonograph Records
hereunder) solely for the purpose of verifying the accuracy of royalty
statements and other accountings rendered by us hereunder, only during
our normal business hours and only upon reasonable written notice. Our
books and records relating to a particular royalty statement or other
accounting may be examined only within two (2) years after the date
rendered or required to be rendered. We shall have no obligation to
permit you to examine our books or records relating to any particular
royalty statement or other accounting more than once. Prior to
rendering a report to you with respect to the examination of our books
and records as aforesaid, the independent certified public accountant
engaged by you shall first review his or her tentative written
findings with a designated representative of our finance department in
order to remedy any factual errors and clarify any issues that may
have resulted from misunderstanding. You hereby acknowledge that our
books and records contain confidential trade information. Neither you
nor your independent certified public accountant or other
representatives shall communicate at any time to any others (except as
required in a legal proceeding between you and us to enforce the
provisions hereof) or use on behalf of any other person, firm or
corporation any facts or information obtained as a result of any
such examination of our books and records. Further, prior to the
commencement of any examination of our books and records in accordance
with the provisions of the subparagraph (e), you shall cause the
independent certified public accountant engaged by you to sign a
letter in a form approved by us which acknowledges his or her
agreement (and the agreement of his or her firm) to be bound by the
foregoing. The rights hereinabove granted to you shall constitute your
sole and exclusive fights to examine our books and records;
(f) We shall have the right to deduct from any monies
payable to you hereunder any amounts paid by us to you or to any
person, firm or corporation representing you or incurred by us on your
behalf or on behalf of any person, firm or corporation representing
you, if those monies are not otherwise required to be paid or incurred
by us hereunder (unless we expressly agree in writing that the payment
in question is non-deductible or is only recoupable from royalties
earned by you hereunder). Without limiting the foregoing, only fifty
percent (50%) of all amounts paid or incurred by us for the services
of third parties to market and promote sales of Phonograph Records
embodying Masters shall be recoupable from royalties earned by you
hereunder; and
(g) We shall have the right to deduct from any monies
payable to you hereunder any amounts which are required to be deducted
from any of those monies under any statute, regulation, treaty or
other law, or under any
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union or guild agreement, and you shall promptly execute and deliver
to us any forms or other documents as may be required in connection
therewith. If we fail for any reason to deduct and instead pay any of
those monies required to be deducted from monies payable to you
hereunder, and if, as a result, we are required by any statute,
regulation, treaty or other law or union or guild agreement to pay to
any third party any amounts which were paid to you but which were
required to be deducted, then, without limiting any of our other
rights or remedies in that event, you shall pay to us, upon our
demand, the amount of those monies which were paid to you but which
were required to be deducted, or, at our election, we may deduct from
any monies payable to you hereunder the amount of those monies paid to
you but which were required to be deducted.
11. Musical Composition Licenses.
(a) You hereby grant to us and our designees the
irrevocable non-exclusive right to reproduce each Controlled
Composition on Phonograph Records and to distribute those Phonograph
Records in the United States and Canada on the following terms and
conditions:
(i) Mechanical royalties shall be payable
for Controlled Compositions on Net Sales of Phonograph
Records in the United States and Canada at the following
rates:
(A) On Phonograph Records sold in
the United States, the rate for each Controlled
Composition embodied thereon shall be the United
States Controlled Composition Mechanical Rate. The
term "United States Controlled Composition
Mechanical Rate" shall mean an amount equal to
seventy-five percent (75%) of the "United States
Mechanical Rate." The term "United States Mechanical
Rate" shall mean an amount equal to the minimum
statutory royalty rate (without regard to playing
time) provided in the United States Copyright Act
for the reproduction of Musical Compositions as of
the "Determination Date" (defined below). The United
States Controlled Composition Mechanical Rate shall
mean an amount equal to eighty-seven and one-half
percent (87.50%) of the United States Mechanical
Rate for each Controlled Composition on Qualifying
Sales of each Required Album which exceed five
hundred thousand (500,000) units;
(B) On Phonograph Records sold in
Canada, the rate for each Controlled Composition
embodied thereon shall be the Canadian Controlled
Composition Mechanical Rate. The term "Canadian
Controlled Composition Mechanical Rate" shall mean
an amount equal to seventy-five percent (75%) of the
Canadian Mechanical Rate. The term "Canadian
Mechanical Rate" shall
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mean an amount equal to the minimum statutory royalty
rate (without regard to playing time) provided in the
Canadian Copyright Act for the reproduction of
Musical Compositions as of the Determination Date. If
no such statutory royalty rate exists, then the term
"Canadian Mechanical Rate" shall mean the minimum,
standard mechanical royalty rate provided in
mechanical licenses between record companies and
unrelated publishers in Canada which are issued by
C.M.R.R.A. (or any successor) as of the Determination
Date. If no such standard mechanical royalty rate
exists, however, then the term "Canadian Mechanical
Rate" shall mean the mechanical royalty rate which we
may, in good faith, negotiate at arm's-length with
unrelated publishers effective as of the
Determination Date. In no event, however, shall the
number of Canadian pennies constituting the Canadian
Mechanical Rate exceed the number of United States
pennies constituting the United States Mechanical
Rate in effect as of the Determination Date; and
(C) The term "Determination Date"
shall mean the date of delivery to us of the first
Master embodying the Musical Composition in question
or, if earlier, the date on which that first Master
was required to be delivered to us hereunder;
(ii) Notwithstanding the foregoing: The
mechanical royalty rate on a Controlled Composition which is
an arrangement of a public domain work shall be that
percentage of the United States Controlled Composition
Mechanical Rate or the Canadian Controlled Composition
Mechanical Rate, as applicable, that is equal to the
percentage of the arrangement of the Controlled Composition
which is original in the arrangement and therefore subject to
copyright in accordance with the rules and regulations of
ASCAP and/or BMI and for which ASCAP and/or BMI provides
written documentation of that percentage of the originality
in and to that arrangement of a Controlled Composition; the
mechanical royalty rate for a Controlled Composition recorded
in an EP, Long-Play Single, Mid-Price Record, Budget Record
or Records sold through record clubs shall be three-fourths
(3/4) of the United States Controlled Composition Mechanical
Rate or the Canadian Controlled Composition Mechanical Rate,
as applicable; if any particular Record (including, without
limitation, so-called "cassette Singles") embodies more than
one (1) of the same or different recordings of the same
Controlled Composition, then the United States Controlled
Composition Mechanical Rate or Canadian Controlled
Composition Mechanical Rate, as the case may be, shall be
payable only once on all reproductions of that Controlled
Composition in that Record; and no mechanical royalties shall
be payable for the reproduction of any
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Controlled Composition on a Phonograph Record unless the
timing of the Controlled Composition in question as recorded
in the Master embodied on that Phonograph Record exceeds one
(1) minute and thirty (30) seconds in length;
(b) The term "Outside Selection" shall mean each
Selection which is not a Controlled Composition. You acknowledge that
as an element of your delivery to us of a Master, you are required to
cause the issuance to us of licenses to reproduce mechanically each
Outside Selection in all Phonograph Records sold in the United States
or Canada on the Required Terms. The term "Required Terms" shall mean
mechanical royalty rates and otherwise on terms that do not exceed
the mechanical royalty rates and that otherwise are no less favorable
to us and our designees than those provided in the standard
mechanical licenses issued by The Harry Fox Agency, Inc. or any
successor for Phonograph Records sold in the United States and by
C.M.R.R.A. or any successor for Phonograph Records sold in Canada,
except (i) the royalty rate for the mechanical reproduction of
Outside Selections on Phonograph Records sold in the United States or
Canada must not exceed the United States Mechanical Rate or the
Canadian Mechanical Rate above, as applicable, and (ii) no royalties
shall be payable for the mechanical reproduction of Outside
Selections on Phonograph Records sold in the United States or Canada
for which no Record royalties are payable under paragraph 9 above or
otherwise. If for any reason you fail to cause the issuance to us of
a license for the mechanical reproduction of any Outside Selection as
and when required hereunder, we shall have the right, at our election
and without limiting our other rights or remedies in that event, to
negotiate and execute licenses for the mechanical reproduction of
each such Outside Selection on Phonograph Records distributed in the
United States or Canada on terms and conditions which are determined
solely by us or our designees. Solely for purposes of subparagraph
(e) below, those licenses so procured by us shall be deemed to be on
terms no less favorable to us or our designees than the Required
Terms. Nothing contained in this subparagraph amends or modifies your
obligation to deliver to us and our designees licenses for the
mechanical reproduction of all Selections recorded in the Masters as
a condition for the delivery to us of Masters or waives the
provisions of subparagraph 11 (i) below;
(c) (i) Notwithstanding anything to the contrary
contained herein, for Net Sales of Phonograph Records in the
following configurations in the United States, the maximum
aggregate mechanical royalty rate for all Selections,
including Controlled Compositions, contained on the
Phonograph Record in question, regardless of the number of
Selections contained thereon, shall be the product of (A) the
United States Controlled Composition Mechanical Rate and (B)
eleven (11) for an Album, five (5) for an EP, and two (2) for
a Single and a Long-Play Single; and for Net Sales of
Phonograph Records in the following
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configurations in Canada, the maximum aggregate mechanical
royalty rate for all Selections, including Controlled
Compositions, contained on the Phonograph Record in question,
regardless of the number of Selections contained thereon,
shall be the product of (A) the Canadian Controlled
Composition Mechanical Rate and (B) eleven (11) for an Album,
five (5) for an EP, and two (2) for a Single and a Long-Play
Single;
(ii) Notwithstanding the foregoing, if we
release a Multiple Album embodying solely Masters hereunder,
then, solely with respect to that Multiple Album, the maximum
aggregate mechanical royalty rate for Net Sales of that
Multiple Album in the United States or Canada shall be the
otherwise applicable maximum set forth in subparagraph 11
(c)(i) above for Net Sales of Albums in the United States or
Canada, as applicable, multiplied by a fraction, the
numerator of which is the Royalty Base Price of that Multiple
Album in the United States or Canada, as applicable, and the
denominator of which is the highest Royalty Base Price of an
Album which is not a Multiple Album in the configuration or
format in question released on our top-line label in the
United States or Canada, as applicable, as of the date of our
initial release through normal retail distribution channels
in the United States or Canada, as applicable, of that
Multiple Album; and
(iii) Notwithstanding anything to the
contrary contained herein, royalties for the mechanical
reproduction of any Selection in any Phonograph Record
distributed in the United States or Canada shall be payable
only on Net Sales of that Phonograph Record in question for
which in a Record royalty is payable hereunder pursuant to
paragraph 9 above. Notwithstanding the foregoing, royalties
for the mechanical reproduction of any Selection in any
Phonograph Record distributed in the United States or Canada
shall be payable on fifty percent (50%) of Required Albums
distributed in the United States on a no-charge basis
intended for sale by the recipient thereof as so-called
"standard free goods" (other than Required Albums distributed
in the United States at no-charge for resale by the recipient
thereof from time to time in connection with short-term or
other special sale programs);
(d) We shall account for and pay royalties for the
mechanical reproduction of Controlled Compositions in accordance with
the provisions of subparagraphs (a), (d), (e), and (g) of paragraph 10
above, except that we shall send to you statements for those
mechanical royalties on or before May 31st for the quarter-annual
period ending the preceding March 31st, on or before August 31st for
the quarter-annual period ending the preceding June 30th, on or before
November 30th for the quarter-annual period ending the preceding
September 30th, and on or before the last day of February for the
quarter-annual period ending the preceding December 31st;
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(e) If for any reason we are required to pay
royalties for the mechanical reproduction of any particular Selection
(including a Controlled Composition) or for the mechanical
reproduction of all Selections that are mechanically reproduced in a
particular Phonograph Record in excess of the applicable amounts fixed
in subparagraphs (a), (b) or (c) above, the royalties payable by us
for the mechanical reproduction of Controlled Compositions on
Phonograph Records hereunder shall be reduced by an amount equal to
such excess. If that excess is greater than the amount of royalties
payable for the mechanical reproduction of Controlled Compositions on
the Phonograph Record in question, then upon our demand, you shall pay
to us an amount equal to the amount by which those excess mechanical
royalties exceed the royalties payable for the mechanical reproduction
of Controlled Compositions. In addition to all of our other rights and
remedies, we may deduct that amount of that excess from any and all
royalties or other monies payable to you under this Contract;
(f) Upon our request, you shall cause the issuance
to us and our designees of licenses to reproduce all Selections
mechanically on Phonograph Records hereunder distributed outside the
United States and Canada on terms no less favorable to us and our
designees than those generally applicable to Phonograph Record
manufacturers in each country in question. The obligation to account
for and pay royalties for the mechanical reproduction of Selections on
sales of Phonograph Records outside of the United States shall be that
of our affiliates and licensees;
(g) 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 us
and our designees the same rights as you are required to grant to us
and our designees pursuant to this paragraph 11;
(h) You hereby grant to us and our designees, at no
fee, royalty, or other cost to us or our designees, the irrevocable,
non-exclusive, worldwide right in perpetuity to reproduce and publicly
perform each Controlled Composition in Audio-Visual Recordings, to
distribute Audio-Visual Records embodying those Audio-Visual
Recordings, and otherwise to exploit in any manner and through any
media those Audio-Visual Recordings. You shall, upon our request,
cause the issuance to us and our designees, at no fee, royalty, or
other cost to us or our designees, the irrevocable, non-exclusive,
worldwide right in perpetuity to reproduce and publicly perform each
Selection which is not a Controlled Composition in Audio-Visual
Recordings, to distribute Audio-Visual Records embodying those
Audio-Visual Recordings, and otherwise to exploit in any manner or
media those Audio-Visual Recordings. If we or our designees shall pay
any such fee, royalty, or other cost, then you shall, upon our demand,
pay us the amount thereof, and we may, in addition to all of our other
rights and remedies, deduct that amount from any monies payable by us
hereunder,
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including without limitation, from those royalties payable pursuant to
paragraph 9 above in respect of the exploitation of Audio-Visual
Recordings in the United States or Canada;
(i) Any assignment, license or other agreement made
with respect to Controlled Compositions shall be subject to the terms
hereof;
(j) You grant to us and our designees the irrevocable
right throughout the world in perpetuity to (A) print and reproduce
on the packaging of Phonograph Records, at our election, the title and
lyrics to each Controlled Composition embodied in a Master and (B)
digitally encode in a Master or transmit together with the
transmission of the Master the title and/or lyrics to each Controlled
Composition embodied in a Master, all without payment to you or any
other person, firm or corporation of any monies or other consideration
in connection therewith. You also shall cause to be granted to us and
our designees the irrevocable right throughout the world in perpetuity
to (A) print and reproduce on the packaging of Phonograph Records
embodying Masters, at our election, the title and lyrics to each
Selection embodied in a Master that is not a Controlled Composition
and (B) digitally encode in a Master or transmit together with the
transmission of the Master the title and/or lyrics to each Selection
embodied in the Master which is not a Controlled Composition, all
without payment to you or any other person, firm or corporation of any
monies or other consideration in connection therewith. If we are
required to pay any monies to any person, firm or corporation for the
printing, reproduction, encoding, or transmission of the title or
lyrics of any Selection recorded in a Master as aforesaid, then you
shall, upon our demand, pay to us an amount equal to those monies paid
by us in connection therewith and we may, in addition to all of our
other rights or remedies, deduct that amount from any monies payable
by us hereunder; and
(k) Notwithstanding anything to the contrary
contained in this Contract, we shall not recoup any advances or other
charges against royalties under this Contract from mechanical
royalties payable for Controlled Compositions on Net Sales of Records
in the United States or Canada, except: (i) pursuant to any provision
hereof in which we have the right to demand payment or reimbursement
to us (such as, but not limited to, our right pursuant to subparagraph
5(a) above to demand payment for excess Recording Costs); or (ii)
pursuant to the indemnity provisions of paragraph 19 below.
12. Audio-Visual Recordings.
(a) Upon our request, and subject to your prior
professional commitments of which you shall notify us in writing upon
our request therefor, you shall appear for the making of Audio-Visual
Recordings embodying your performances on the following terms:
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(i) We shall designate for your and our
mutual approval the Musical Compositions which shall be
embodied in the Audio-Visual Recordings, the producer and
director of the Audio-Visual Recordings, all other
individuals rendering services in connection with the
production of the Audio-Visual Recordings, the storyboard and
script for the production of the Audio-Visual Recordings, and
the locations at and the dates on which the Audio-Visual
Recordings shall be produced (collectively referred to as
"Audio-Visual Production Elements") or, at our election, you
shall designate and submit to us for your and our mutual
approval one (1) or more Audio-Visual Production Elements;
(ii) We shall pay the Audio-Visual Production
Costs of the Audio-Visual Recordings in an amount not in
excess of a budget designated or approved by us in writing.
"Audio-Visual Production Costs" shall mean and include all
minimum union scale payments made to you in connection with
the production of the Audio-Visual Recordings, all payments
which are made to any other individuals rendering services in
connection with the production of the Audio-Visual
Recordings, all other payments which are made pursuant to any
applicable law or regulation or the provisions of any
collective bargaining agreement between us and any union or
guild (including, without limitation, payroll taxes and
payments to union pension and welfare funds), all amounts
paid or incurred 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 you) rendering services in connection
with the production of the Audio-Visual Recordings, together
with all other amounts paid or incurred in connection with
the production and delivery to us of the Audio-Visual
Recordings. One hundred percent (100%) of the Audio-Visual
Production Costs shall be recoupable from royalties payable
under this Contract on the reproduction or other exploitation
of all Audio-Visual Recordings and Audio-Visual Records. Only
fifty percent (50%) of the aggregate Audio-Visual Production
Costs of each Audio-Visual Recording shall be recoupable from
royalties payable under this Contract on the reproduction or
other exploitation of Masters in Phonograph Records
reproducing sound alone, provided, however, that only
fifty-percent (50%) of the cost of producing so-called
"electronic press kits" shall be recoupable from your
royalties hereunder;
(iii) The Audio-Visual Recordings shall be
produced in accordance with the rules and regulations of all
labor unions and guilds having jurisdiction over the
production thereof;
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(iv) You shall cooperate with us and our
designees fully and to perform to the best of your ability in
connection with the production of the Audio-Visual
Recordings; and
(v) If the Audio-Visual Production Costs
exceed the budget approved by us in writing, unless as a
result of a cause solely within our control, you shall be
solely responsible for and shall promptly pay that excess.
If, however, we pay any excess Audio-Visual Production Costs,
you shall pay to us, upon our demand, an amount equal to that
excess. If for any reason you delay the commencement of or
are not available for any scheduled appearance by you
relating to the production of the Audio-Visual Recordings,
you shall pay to us, upon our demand, an amount equal to the
expenses or charges paid or incurred by us by reason thereof.
Notwithstanding anything to the contrary contained herein,
without limiting our other rights and remedies, we may deduct
the foregoing amounts from any monies payable by us
hereunder;
(b) Our rights in the Audio-Visual Recordings and our
rights to use your name and the name, likeness, and other
identification and biographical material concerning you are set forth
in paragraphs 6 and 7 hereof, wherein the terms "Master Recordings"
and "Phonograph Records" include Audio-Visual Recordings and
Audio-Visual Records, respectively; and
(c) Audio-Visual Recordings shall not apply in
fulfillment of your Recording Commitment. We shall have no obligation,
except as expressly otherwise provided in this paragraph 12, to pay to
you any monies in connection with the production of Audio-Visual
Recordings.
13. Warranties. Representations and Covenants. You hereby
warrant, represent, covenant and agree as follows:
(a) You have the right and power to enter into this
Contract, to grant the rights granted by you to us hereunder, and to
perform all of the terms hereof. Without limiting the generality of
the foregoing, no Musical Composition, other Selection or any other
material recorded by you shall be subject to any re-recording or other
restrictions;
(b) During the Term, you shall become and remain
members in good standing of any labor union or guilds with which we
may at any time have an agreement lawfully requiring your membership;
(c) All recording sessions for the Masters shall be
conducted in all respects in accordance with the terms of the AFofM
Phonograph Record Labor Agreement, of the AFTRA Code for the
Phonograph Industry, and of the
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agreements with all other labor unions and guilds having jurisdiction
over the recording of the Masters;
(d) None of the following will violate or infringe
upon the rights of any person, firm or corporation, including, without
limitation, contractual rights, copyrights, rights of publicity and
rights of privacy: any name or other identification used by you; any
Controlled Compositions; any other Selections; and any materials,
ideas, or other properties furnished or designated by you and embodied
or contained in or used in connection with the Masters or the
packaging of or the advertising for the Phonograph Records embodying
the Masters;
(e) All Master Recordings embodying your
performances heretofore have been released commercially in the United
States on Phonograph Records;
(f) You shall not 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;
(g) Except as otherwise specifically provided herein,
we shall have no obligation hereunder or otherwise to pay any person,
firm, or corporation any amounts in connection with the exercise of
any of our rights hereunder, including, without limitation, our rights
with respect to the recording or exploitation of Master Recordings;
and
(h) Without limiting the generality of anything
contained in the foregoing, you shall neither authorize the production
of, nor shall you produce for or deliver to us, any Master for which
the recording method known as "sampling" shall have been utilized to
record in that Master any sound or material created, owned or
controlled by any third party, unless you do so in accordance with the
provisions of paragraph 23 below.
14. Recording Restrictions.
(a) During the Term, you shall not enter into any
agreement or make any commitment which would interfere with your
performance of any of the terms hereof. Further, during the Term, you
shall not perform for or render services in connection with the
recording of any Master Recordings for use or reproduction in
Phonograph Records by any person, firm, or corporation other than us.
After the Term, you shall not perform prior to the Restriction Date
for any person, firm or corporation other than us, for the purpose of
making Phonograph Records or Master Recordings, any Selection recorded
hereunder
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or under any other agreement between you and us or our affiliates. The
term "Restriction Date" shall mean the later of (i) the date five (5)
years subsequent to the last date on which a Master Recording
embodying that Selection was delivered to us and (ii) the date two (2)
years subsequent to the date on which the Term ended; and
(b) You shall not at any time manufacture,
distribute, or sell or authorize the manufacture, distribution, or
sale by any person, firm, or corporation other than us of Phonograph
Records embodying (i) any performance rendered by you during the Term
or (ii) any performance rendered by you after the Term of a Selection
recorded hereunder if that performance shall have been rendered prior
to the Restriction Date applicable to that Selection. Furthermore, you
shall not 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 us of
Phonograph Records embodying that performance. Specifically, but
without limiting the generality of the foregoing, if during the Term
you perform any Selection or if after the Term you perform any
Selection prior to the Restriction Date applicable thereto, you will
not 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 our request, you shall promptly deliver to us a copy of the
pertinent provisions of each such contract and you shall cooperate
fully and reasonably with us in any controversy which may arise or
litigation which may be instituted relating to our rights pursuant to
this paragraph.
15. Unique Services. You expressly acknowledge that your
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 of any term hereof, we will be caused irreparable injury which cannot
adequately be compensated by money damages. Accordingly, we shall be entitled
to seek injunctive relief, in addition to any other rights or remedies which
we may have, to enforce the terms of this Contract.
16. Certain Remedies.
(a) We may, at our election, suspend the running of
the Term and our obligations hereunder upon written notice to you (i)
if for any reason whatsoever your voice or ability to perform as an
instrumentalist shall become impaired, (ii) if you shall refuse,
neglect, fail, or be unable to fulfill any of your obligations
hereunder, or (iii) if as a result of an Act of God, accident, fire,
labor controversy, riot, civil commotion, act of public enemy, law,
enactment, rule, order, or act of any government or governmental
instrumentality, failure of technical facilities, failure or delay of
transportation facilities, illness or incapacity
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of you, or others, or other cause of a similar or dissimilar nature
not reasonably within our control, we are hampered in the recording,
manufacture, distribution, or sale of Phonograph Records or our normal
business operations become commercially impractical. A suspension
shall be for the duration of any such event or contingency, and,
unless we notify you to the contrary in writing, the Contract Period
during which that event or contingency shall have commenced shall be
automatically extended by a number of days equal to the total number
of days of the suspension, or such fewer number of days of which we
may advise you in writing. No suspension shall in any manner suspend
or otherwise impair our rights under this Contract;
(b) If your voice or ability to perform as an
instrumentalist shall become impaired or if you shall refuse, neglect,
fail, or be unable to fulfill any of your obligations hereunder,
including, without limitation, your obligation to record for and
deliver to us Masters within the time periods set forth in paragraph 3
above, we may, without limiting our other rights or remedies,
terminate the Term upon written notice to you, in which event we shall
have no obligations or liabilities to you under this Contract, except
for our obligations, if any, with respect to Masters recorded prior to
that termination. If we so terminate the Term, you shall pay us, on
demand, an amount equal to any unrecouped advances hereunder, other
than any advances attributable to and paid in respect of a Required
Album theretofore delivered by you to us; and
(c) In addition to our other rights hereunder, we
shall have the right, at our election and for any reason, with or
without cause, to terminate the Term at any time by written notice to
you. Additionally, we shall have the right, at our election, with or
without cause, to refuse to permit you to fulfill your then-current
Recording Commitment for any Contract Period including, without
limitation, by discontinuing recording sessions for any Masters and
ceasing the payment of Recording Costs for any Masters. If we refuse
to permit you to fulfill your minimum Recording Commitment for any
Contract Period, other than as a result of an event or contingency
referred to in subparagraph 16(a) above, we shall have no obligations
or liabilities to you in connection therewith unless within forty five
(45) days after our refusal you shall notify us of your desire to
fulfill your minimum Recording Commitment for that Contract Period and
within thirty (30) days after our receipt of that notice we shall fail
to advise you in writing that we shall permit you to fulfill your
minimum Recording Commitment for that Contract Period. If we shall
fail to so advise you in writing that we shall permit you to fulfill
your minimum Recording Commitment for that Contract Period, the Term
shall expire as of the end of that thirty (30) day period and we shall
have no obligations or liabilities to you whatsoever in connection
with our failure to permit you to fulfill your Recording Commitment
for that Contract Period. We shall, however, pay to you promptly after
the expiration of that thirty (30) day period, as an advance
recoupable from royalties hereunder or under any other agreement
between you and us or our affiliates, an amount equal to the minimum
union
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scale payments which would have been required to have been paid to you
for each Required Album for that Contract Period that we did not
permit you to record. For the purposes of the foregoing, an Album
shall be deemed to be comprised of eight (8) Masters.
17. Producer and Other Royalties.
(a) You shall cause any and all producers of the
Masters to execute a Producer Declaration in the form attached hereto
as Exhibit A prior to the commencement of recording sessions for any
Masters hereunder. Without limiting the generality of anything set
forth in paragraph 4 above, no recording sessions shall be commenced
nor shall we have any obligation to pay to you any advances for the
Masters pursuant to paragraph 8 above unless and until you shall have
entered into a binding agreement with any and all producers of the
applicable Masters and we shall have received an executed Producer
Declaration from any and all producers of the applicable Masters;
(b) 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 producers or directors of
Audio-Visual Recordings or to any others rendering services in
connection with the recording of the Masters and the production of
Audio-Visual Recordings or otherwise entitled to compensation in
respect of the exploitation of Masters or Audio-Visual Recordings; and
(c) We may, but shall not be obligated to, enter into
an agreement with any producers of the Masters or any producer or
director of any Audio-Visual Recordings which provides for the payment
by us, rather than you, of royalties or other compensation payable to
any such producer or director. We may deduct any amounts payable by us
to those producers or directors of Masters or Audio-Visual Recordings
from any monies payable by us hereunder. Furthermore, for the purposes
of the recoupment of any advances or charges under this Contract, the
royalty rates contained in paragraph 9 with respect to those Masters
and Audio-Visual Recordings shall be deemed reduced by the amount of
the applicable royalty rates with respect to Masters and Audio-Visual
Recordings payable by us to any such producers or directors. Any
advances payable by us to those producers or directors which are not
recouped by us from royalties payable to those producers or directors
may be recouped by us from any royalties or other sums payable by us
hereunder.
18. Definitions.
(a) The term "Album" shall mean a twelve (12) inch
thirty-three and a third (33-1/3) rpm long-playing vinyl-disc
Phonograph Record of no fewer than forty-five (45) minutes in playing
time or its cassette tape or other equivalent or substantial
equivalent in any form or configuration, and, where the context
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requires, Masters sufficient to constitute a twelve (12) inch
thirty-three and a third (33-1/3) long-playing vinyl-disc Phonograph
Record of no fewer than forty-five (45) minutes in playing time or its
tape or other equivalent or substantial equivalent in any form or
configuration. The maximum playing time of an Album shall not exceed
the maximum number of minutes capable of being reproduced pursuant to
the technological specifications of the format or configuration
concerned, which shall be designated by us in our reasonable good
faith discretion;
(b) The term "Audio-Visual Record" shall mean a
Phonograph Record embodying visual images;
(c) The term "Audio-Visual Recording" shall mean a
Master Recording embodying visual images;
(d) (i) The term "Budget Audio-Visual Record" shall
mean an Audio-Visual Record which bears a Royalty Base Price
in the country in question which is sixty-six and two-thirds
(66-2/3%) percent or less of the Royalty Base Price in that
country of top-line Audio-Visual Records on which recordings
of the majority of our artists are initially released in that
country;
(ii) The term "Budget Record" shall mean a
Phonograph Record which bears a Royalty Base Price in the
country in question which is sixty-six and two-thirds
(66-2/3%) percent or less of the Royalty Base Price in that
country of top-line Phonograph Records on which recordings of
the majority of our artists are initially released in that
country;
(e) The term "Compact Disc" shall mean a Digital
Record in any configuration (e.g., Album, Single, EP) in disc form
primarily reproducing sound (but not together with visual images), the
signals of which are read and transmitted from that disc by means of
laser;
(f) The term "Controlled Composition" shall mean a
Musical Composition or other Selection, written or composed by you, in
whole or in part, 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
an indirect interest;
(g) The terms "Conventional Phonograph Record,"
"Conventional cassette tapes," "Conventional vinyl discs" and
"Conventional Album" shall refer to black vinyl discs or analog tape
cassettes of customary quality;
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(h) The term "Digital Records" shall mean Records in any
configuration (e.g., Album, Single, EP), the signals of which are
encoded and decoded by digital technology, whether now known or
hereafter devised, as opposed to analog technology, and shall include,
without limitation, Compact Discs, digital audio tapes, mini discs and
digital compact cassettes. Notwithstanding the foregoing, the term
"Digital Records" shall not mean a Record exploited by means of direct
transmission (whether digital or otherwise) via satellite, cable or
other direct transmission to the consumer over wire or through the air,
which shall constitute a New Record hereunder for all purposes;
(i) The term "delivery to us" or words of similar connotation
used in connection with Master Recordings or Masters shall mean
delivery to our Production Manager at our offices in New York, New York
of all of the following: a two-track sequenced, equalized, fully-mixed
and mastered digital audio tape and/or U-matic 1630 tape in proper form
for the production of the parts necessary to manufacture Phonograph
Records therefrom and all consents, approvals, copy information,
credits, mechanical licenses for all Selections recorded in those
Master Recordings or Masters and other material and documents required
by us to release Phonograph Records embodying those Master Recordings
or Masters and to manufacture album covers or other packaging therefor
(including, without limitation, Artwork). Our election to pay to you
any monies which were otherwise required to have been paid upon or
promptly after your delivery to us of Masters or our election to
release any Phonograph Record derived from any Master shall not be
deemed to be an acknowledgment by us that delivery to us of that Master
or Masters has been completed in accordance with the provisions of this
subparagraph (i). Further, in either event, we shall not be deemed to
have waived our right to require your complete and proper performance
thereafter of your obligation to deliver to us any Masters or any of
our remedies for your failure to do so in accordance with the
provisions hereof;
(j) The term "EP" shall mean a twelve (12) inch thirty-three
and a third (33-1/3) rpm or forty-five (45) rpm vinyl-disc Phonograph
Record, or its cassette tape or other equivalent or substantial
equivalent in any form or configuration, embodying no fewer than four
(4) Musical Compositions and no more than seven (7) Musical
Compositions;
(k) The term "Long-Play Single" shall mean a twelve (12) inch
thirty-three and a third (33-1/3) rpm or forty-five (45) rpm vinyl-disc
Phonograph Record, or its cassette tape equivalent or other equivalent
or substantial equivalent in any form or configuration, embodying one
(1) or more recordings of no more than three (3) different Musical
Compositions;
(1) The term "Master Recording" shall mean every form of
recording (whether now known or unknown), embodying sound alone, or
sound
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accompanied by visual images, which may be used in the recording,
production, or manufacture of Phonograph Records;
(m) The term "Master" shall mean a Master Recording embodying
your performances recorded during the Term;
(n) (i) The term "Mid-Price Audio-Visual Record" shall mean an
Audio-Visual Record bearing a Royalty Base Price in the
country in question in excess of sixty-six and two-thirds
(66-2/3%) percent and less than eighty (80%) percent of the
Royalty Base Price in that country of top-line Audio-Visual
Records on which recordings of the majority of our artists are
initially released in that country;
(ii) The term "Mid-Price Record" shall mean a Phonograph
Record bearing a Royalty Base Price in the country in question
in excess of sixty-six and two-thirds (66-2/3%) percent and
less than eighty (80%) percent of the Royalty Base Price in
that country of top-line Phonograph Records on which
recordings of the majority of our artists are initially
released in that country;
(o) The term " Multiple Album" shall mean a single package
containing two (2) or more Albums, or their cassette tape or other
equivalent or substantial equivalent in any form or configuration,
which is sold as a single unit, and, where the context requires, Master
Recordings sufficient to constitute a single package containing two (2)
or more Albums, or their tape or other equivalent or substantial
equivalent in any form or configuration, which is sold as a single
unit;
(p) The terms "Musical Composition" and "Composition" shall
mean a single musical composition and, for the purposes of computing
mechanical royalties hereunder, shall include a medley;
(q) (i) With respect to Masters other than Audio-Visual
Recordings, the term "Net Receipts" shall mean the flat-fee,
if specifically attributable solely to one (1) or more
Masters, or the royalty, as the case may be, received by us
from a person, firm or corporation from the exploitation by
that person, firm or corporation of rights in those Masters,
less all costs paid or incurred by us in connection with the
exploitation of those rights and the collection of those
monies, less all taxes and adjustments and less all royalties
or other sums payable by us to any person, firm or corporation
in connection with the exploitation of those rights,
including, without limitation, royalties for the mechanical
reproduction of the Selections embodied in those Masters, but
excluding royalties or other sums payable to producers of
those Masters, which shall be borne solely by you; and
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(ii) With respect to Audio-Visual Recordings, the term
"Net Receipts" shall mean an amount equal to the flat-fee, if
specifically attributable solely to one (1) or more
Audio-Visual Recordings, or the royalty, as the case may be,
received by us from a person, firm or corporation from the
exploitation by that person, firm or corporation of rights in
those Audio-Visual Recordings, less twenty percent (20%) of
those monies as a distribution fee, less all costs paid or
incurred by us in connection with the exploitation of those
rights and the collection of those monies and less all taxes
and adjustments and less all royalties or other sums payable
by us to any person, firm or corporation in connection with
the exploitation of those rights, including, without
limitation, royalties for the mechanical reproduction of the
Selections embodied in those Audio-Visual Recordings, but
excluding royalties or other sums payable to producers of the
Masters embodied in those Audio-Visual Recordings and
producers or directors of those Audio-Visual Recordings, which
shall be borne solely by you;
(r) The term "Net Sales" shall mean ninety-percent (90%) of
gross sales of Phonograph Records hereunder for which final payment has
been received by us in United States Dollars in the United States,
after deducting from such gross sales returns, credits, and reserves
against anticipated returns and credits;
(s) The term "Net Sales through Normal Retail Distribution
Channels" shall mean Net Sales of Phonograph Records hereunder through
our principal distributor in the country in question for resale through
record or other retail stores for which a Record royalty is payable
hereunder after the retention of reserves (and, without limiting the
generality of the foregoing, shall exclude sales or distributions
referred to in subparagraph 9(b) above, but shall include sales or
distributions referred to in subparagraph 9(b)(vii)(B) above);
(t) The term "New Record" shall mean a Phonograph Record in
any software medium in which recorded music is not in general
commercial distribution in the United States as of January 1, 1997,
including, without limitation, the sale of Phonograph Records (or other
exploitation of Masters) through the telephone, satellite, cable or
other direct transmissions to the consumer over wire or through the air
(as distinguished from radio or television advertised sales of
Phonograph Records described in subparagraph 9(b)(i) above);
(u) 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,
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cassettes, other pre-recorded tapes, or any digital copy, including,
without limitation, so-called "temporary copy";
(v) The term "Royalty Base Price" shall mean the following
amounts for the following Phonograph Records:
(i) (A) With respect to Phonograph Records (other than
Audio-Visual Records) sold in the United States or Canada, the
SRLP except as set forth below; and
(B) With respect to royalties payable on Net Sales of
Phonograph Records in the United States or Canada for which
the Royalty Base Price is the SRLP, we shall have the right,
at any time, at our election, to calculate royalties hereunder
on the basis of our principal distributor's price (before
consideration of any discounts resulting from the distribution
of free goods), from time to time, to its customers in the
United States of Phonograph Records, in lieu of the SRLP of
those Phonograph Records, multiplied by an "uplift." As used
in the immediately-preceding sentence, the term "our principal
distributors price" shall mean the lowest wholesale price paid
by the largest category of customers to our principal
distributor in the United States during the relevant
semi-annual accounting period. If we elect to do so, then we
shall calculate that "uplift" as a fraction, the numerator of
which is the SRLP of a Comparable Phonograph Record
immediately prior to our discontinuance of retail-based
calculations and the denominator of which is our principal
distributor's price (before consideration of any discounts
resulting from the distribution of free goods) to its
customers in the United States of a Comparable Phonograph
Record immediately prior to our discontinuance of retail-based
calculations. The application of the foregoing provisions of
this subparagraph shall not result in a reduction in the
amount of royalties otherwise payable to you hereunder on a
configuration-by-configuration basis immediately prior to our
discontinuance of retail-based calculations. For purposes of
this subparagraph, the term "Comparable Phonograph Record"
shall mean a Phonograph Record of the same configuration, with
the same packaging, and in the same price category as the
Phonograph Record in question; and
(ii) With respect to Phonograph Records (other than
Audio-Visual Records) sold outside of the United States and
Canada:
(A) If an SRLP is established or utilized by our
licensee (whether or not affiliated with us) in a particular
country in
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accounting to us, then that particular SRLP established or
utilized by our licensees shall apply to Phonograph Records
hereunder;
(B) If an SRLP is not established or utilized by our
licensee (whether or not affiliated with us) in a particular
country in accounting to us on sales of Phonograph Records,
then, at our election, (1) the price upon which mechanical
royalties are generally computed and paid by major record
companies (including, without limitation, our then-current
principal distributor) in the country in question pursuant to
the then-current agreement between major record companies and
the mechanical reproduction rights society in that country or
(2) an amount computed by multiplying the lesser of (aa) that
percentage utilized by our affiliate or licensee in computing
a retail related price or constructed price on which royalties
are paid to us and (bb) one hundred twenty-six percent (126%),
by the lowest of (aa) the so-called "published price to
dealers," (bb) the lowest wholesale price paid to our or our
affiliate's or licensee's principal distributor in the country
in question by the largest category of customers during the
relevant semi-annual accounting period and (cc) the wholesale
price which our licensee (whether or not affiliated with us)
in a particular country uses in accounting to us for
royalties.
(iii) With respect to Audio-Visual Records sold in any
country of the world, an amount equal to the monies actually
received by us in the United States (or credited to us in
final reduction of an advance previously received by us in the
United States) from the sale of those Audio-Visual Records
(rather than their actual SRLP, wholesale price, published
price to dealers or any other price), after deduction of a
distribution fee of twenty percent (20%) of those monies; and
(iv) There shall be deducted from the Royalty Base Price
an amount equal to any excise, sales, value added or
comparable or similar taxes which are included therein;
(w) The term "Selection" shall mean a Musical Composition,
poem, dramatic work, comedy routine, or other verbal expression;
(x) The term "Single" shall mean a seven (7) inch vinyl-disc
Phonograph Record or its tape or other equivalent or substantial
equivalent in any form or configuration; and
(y) Except as otherwise herein provided, the term "SRLP" shall
mean those suggested retail list prices established by us or our
affiliates or licensees from time to time for Phonograph Records in a
particular configuration
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which shall be determined from time to time with reference to the
relevant wholesale price in a manner that shall be applied consistently
to a majority of our (or our licensees' or affiliates') then-current
recording artists. With respect to New Records that are distributed by
telephone, satellite, cable or other direct transmissions over wire or
through the air, the term "SRLP" shall mean either those suggested
retail list prices therefor, if any, established by us or our
affiliates in accordance with the terms of the preceding sentence or
those retail list prices charged to the ultimate consumer therefor,
excluding any shipping and handling charges in connection therewith.
19. Indemnity. You hereby indemnify, save, and hold us harmless from
any and all damages, liabilities, costs, losses and expenses (including legal
costs and attorneys' fees) arising out of or connected with any claim, demand or
action by us or by a third party which is inconsistent with any of the
warranties, representations or covenants made by you in this Contract. You shall
reimburse us, on demand, for any payment made by us 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, we may
withhold, at our election, payment of any monies otherwise payable to you
hereunder or under any other agreement between you and us or our affiliates in
an amount which does not exceed your potential liability to us pursuant to this
paragraph.
20. Assignment. We shall have the right, at our election, to assign
this Contract or any of our rights hereunder, in whole or in part, or to
delegate any of our obligations hereunder, in whole or in part, to any person,
firm or corporation. You shall not have the right to assign this Contract or any
of your rights or to delegate any of your obligations hereunder.
21. Notices. 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 us hereunder
shall be addressed to us at the address set forth on page 1 hereof or at such
other address as we shall designate in writing from time to time. All notices
shall be in writing and shall either be served by personal delivery, certified
mail, return receipt requested, or facsimile transmission (with a copy sent
concurrently by certified mail, return receipt requested), all charges prepaid,
except that statements and payments may be sent by regular mail. Notices to us
must be sent to the attention of our Senior Vice President, Business & Legal
Affairs. Except as otherwise provided herein, notices shall be deemed given when
personally delivered, mailed as aforesaid, or transmitted by facsimile (with a
concurrent copy mailed as aforesaid), all charges prepaid, except that notices
of change of address shall be effective only after actual receipt. A copy of
each notice to us shall be sent simultaneously to Mitchell, Silberberg & Knupp
LLP, 11377 West Olympic Boulevard, Los Angeles, California 90064, to the
attention of J. Eugene Salomon, Jr., Esq. A courtesy copy of each notice to you
hereunder shall be sent to
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Bobbitt & Roberts, 1620 26th Street, Suite 150 South, Santa Monica, California
90404, to the attention of Jacque Shirley, Esq.
22. Miscellaneous.
(a) This Contract sets forth your and our entire understanding
relating to its subject matter. No modification, amendment, waiver,
termination or discharge of this Contract or of any its terms shall be
binding upon either of us unless confirmed by a document signed by you
and by a duly authorized officer of ours. No waiver by you or us of any
term of this Contract or of any default hereunder shall affect your or
our 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) We shall not be deemed to be in breach of any of our
obligations hereunder unless and until you shall have given us specific
written notice by certified or registered mail, return receipt
requested, describing in detail the breach and we shall have failed to
cure that breach within thirty (30) days after our receipt of that
written notice;
(c) Our payment obligations under this Contract are
conditioned upon your full and faithful performance of the terms
hereof;
(d) Wherever your approval or consent is required hereunder,
that approval or consent shall not be unreasonably withheld. We may
require you to formally give or withhold approval or consent by giving
you notice of our 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 us written notice of your approval or
disapproval or of your consent or non-consent within five (5) days
after our 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 us notice as aforesaid shall be deemed to be
consent or approval, as the case may be, with respect to the matter
submitted;
(e) Nothing herein contained shall constitute a partnership,
joint venture, or fiduciary relationship between you and us. Except as
otherwise expressly provided herein, you are performing your
obligations hereunder as an independent contractor. Neither party
hereto shall hold itself out contrary to the terms of this subparagraph
22(e) and neither you nor we shall become liable for any
representation, act or omission of the other contrary to the provisions
hereof;
(f) This Contract shall not be deemed to give any right or
remedy to any third party whatsoever unless that right or remedy is
specifically granted by us in writing to that third party;
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such physical examinations and to complete and deliver such forms as we
may reasonably require and otherwise to cooperate with us fully for the
purpose of enabling us to secure that insurance. We shall not disclose
the results or findings of such physical examinations, except to our
representatives, as required by law or legal process, as required to
implement or secure the insurance policy in question or to enforce the
provisions of this subparagraph (m);
(n) Upon our request, you shall render your services at such
times and places as we may reasonably designate for the purpose of
assisting us in the marketing, advertising and promotion of Phonograph
Records hereunder. Among those services are engaging in interviews,
participating in press conferences, posing at photography sessions and
appearing on television and radio shows. Promptly after your submission
to us of invoices or other suitable documentation therefor, we shall
pay to you or reimburse you for the reasonable costs of travel and
accommodations which are actually paid or incurred by you in connection
with your services under this subparagraph 22(n), but you shall not pay
or incur any costs or expenses in connection with your services under
this subparagraph 22(n) which are to be paid or reimbursed by us unless
you and we mutually agree in writing on the nature and extent of those
costs and expenses. If we pay or incur any costs in connection with
your services pursuant to this subparagraph 22(n) ("Promotional
Services Costs"), those Promotional Services Costs shall not be
recoupable from royalties earned by you hereunder. If, however, any
third party pays to you any fee or other consideration for or in
connection with your services pursuant to this subparagraph 22(n) (such
as, but not limited to, a television appearance fee) and we pay or
incur any Promotional Services Costs in connection. therewith, then you
shall pay to us all such fees and other consideration to the extent of
our Promotional Services Costs in connection therewith. If you fail for
any reason to pay to us those fees to the extent of our Promotional
Services Costs, then, at our election, the amount of all such fees
received by you from third parties in connection with your services
pursuant to this subparagraph 22(n) in an amount equal to our
Promotional Services Costs shall be deemed to be advances recoupable
from any and all monies payable to you pursuant to this Contract;
(o) You shall not render any services to or authorize or
permit your name or likeness or any biographical material concerning
you to be used in any manner by any person, firm or corporation in the
advertising, promoting or marketing of blank magnetic recording tape,
digital audio tape or any other product or device intended to be sold,
whether now known or hereafter developed, which may be used for the
fixation of sound alone or sound together with visual images;
(p) You acknowledge and agree that you have been represented
by independent legal counsel or have had the unrestricted
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recording artist(s), recording companies, songwriters and publishers
who have any right, title or interest in and to the Other Material
embodied in that Master Recording intended to be delivered to us as a
"Master" subject to this Contract as a result of that Sampling; no
Sampled Master shall violate or infringe on the rights of any other
person, firm or corporation, including, without limitation, the
copyrights owned or controlled by any other person, firm or
corporation; as between you, on the one part, and us, on the other
part, you shall be solely responsible for and shall account for and pay
to the persons, firms or corporations that own or control Other
Material all monies to which those other person, firms or corporations
are entitled to as a result of the Sampling of any Other Material in
Sampled Masters subject to this Contract; and, as between you and us,
you shall be solely responsible for obtaining all consents and licenses
necessary or desirable in connection with the use and reproduction and
licensing the use and reproduction of Other Material in Sampled
Masters. No royalties, advances or other money shall be earned by or
payable to you hereunder in connection with any Sampled Master and no
Sampled Masters shall be deemed to be delivered to us in fulfillment of
your Recording Commitment unless and until we obtain documentation
reasonably satisfactory to us of the foregoing.
If the foregoing correctly reflects your agreement with us,
please so indicate by signing below.
Very truly yours,
WALL STREET RECORDS LLC,
d/b/a ANTRA RECORDS
By: xxxxxxxxxxxxxxxxxxxxxxxx
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By: xxxxxxxxxxxxxxxxxxxxxxxxxxxx
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AGREED AND ACCEPTED:
/s/ David Ware
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DAVID WARE, p/k/a "BABY S"
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EXHIBIT A
PRODUCER DECLARATION
I, the undersigned, declare that I have read and understand those
relevant portions of the agreement between Wall Street Records LLC d/b/a ANTRA
Records ("ANTRA") c/o A&M Records, Inc., Worldwide Plaza, 825 8th Avenue, New
York, New York, 10019 and David Ware (currently professionally known as "Baby S"
and referred to below as "Artist") dated __________, 1998 ("Artist Agreement')
that pertain to my record production endeavors.
I hereby certify that I have produced or will have produced certain
master recordings embodying Artist's featured performance ("Masters") pursuant
to an agreement between Artist and me ("Producer Agreement') which provides for
valuable consideration to be paid to me. As part of my material obligations
pursuant to the Producer Agreement and for the express and direct benefit of
ANTRA, I hereby:
A. Grant to ANTRA the perpetual right to use and publish and to
permit others to use and publish my name, signature, approved
likeness, and approved biographical material concerning me for
advertising and trade purposes in connection with the sale and
exploitation of masters and records manufactured from masters
recorded pursuant to the Artist Agreement, or to refrain
therefrom.
B. Agree to look solely to Artist for the payment of any
advances, fees and/or royalties, as the case may be, and will
not assert any claim in this regard against ANTRA or attempt
to prevent the manufacture, sale or distribution of phonograph
records manufactured from Masters produced under the terms and
conditions of the Artist Agreement and the Producer Agreement.
Any payments that I receive from ANTRA in connection with the
exploitation of Masters or my services pursuant to Producer
Agreement shall have been made solely as an accommodation to
Artist and nothing contained herein, in the Producer Agreement
or in the Artist Agreement shall constitute me a beneficiary
of or party to the Artist Agreement or any other agreement
between ANTRA and Artist.
C. Acknowledge and agree that each Master recorded under the
Producer Agreement embodying the results and proceeds of my
services (i) is prepared within the scope of the Artist's
engagement of my personal services and is a "work made for
hire" or (ii) is prepared as part of a long-playing phonograph
record (or its substantial equivalent) which constitutes a
work specially ordered
A-1
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by Artist or ANTRA for use as a contribution to a collective
work and shall be considered a "Work made for hire." I further
acknowledge that ANTRA is the exclusive owner of copyright
with respect to each such Master and any "sound recording" or
"phonorecord" or "copy" manufactured therefrom (individually
and collectively called the "Work"), and that ANTRA has the
right to exercise all rights of the copyright proprietor with
respect thereto, including, but not limited to, all exclusive
right specified in 17 U.S.C. ss. 106 and the exclusive right
to register copyright in the name of ANTRA.
D. Notwithstanding the provisions of paragraph C above, I agree
that to the extent, if any, that I may be deemed an "author"
of any Work, I hereby irrevocably transfer, grant, convey and
assign to ANTRA, exclusively, perpetually and throughout the
universe, all exclusive right, title and interest in and to
such Work, including, but not limited to, all exclusive right
of the copyright owner as specified in 17 U.S.C.ss. 106. 1
hereby grant to ANTRA a power of attorney, irrevocable and
coupled with an interest, to execute for me and in my name,
all documents and instruments necessary or appropriate to
effectuate the intents and purposes of this paragraph D and to
accomplish, evidence and perfect the rights granted to ANTRA
pursuant to this paragraph D including but not limited to
documents to apply for and obtain all registration of
copyrights in and to any such Work, and documents to assign
such copyrights to ANTRA.
E. Agree that I shall not produce or co-produce, prior to the
date three (3) years after the Master shall have been
delivered to ANTRA in accordance with the provisions of the
Artist Agreement, any recording for any person, firm or
corporation other than ANTRA which embodies, in whole or in
part, any of the selections recorded in the Masters.
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SS#:
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Address:
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A-2
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This agreement (sometimes referred to herein and in the attached Annex A as the
"Label Agreement") is made as of October 28, 1999, between ANTRA MUSIC GROUP,
INC., 1515 Locust Street, Philadelphia, PA 19102 (hereinafter "ANTRA") and
LEGAL GRIND ENTERTAINMENT, INC. with an address at 9424 Dayton Way, Suite 250,
Beverly Hills, CA 90210 (hereinafter "you" or "LGE").
1. Term.
(a) ANTRA hereby engages you to furnish exclusively to ANTRA
Recordings by various artists to be determined in the manner
provided in paragraph 2 hereof. The term of this agreement
(the "Term") shall be for an initial period ("Initial Label
Period") commencing on the date hereof and ending twenty-four
(24) months from the date hereof.
(b) Additionally, you hereby grant ANTRA one (1) separate option
to extend the term of this agreement for an additional Label
Period ("Label Option Periods"). ANTRA may exercise said
option by sending you a notice at any time before the end of
the Initial Label Period. The Label Option Period shall
commence upon the expiration of the Initial Label Period and
shall end twenty-four (24) months thereafter.
2. Artists.
(a) During the Term you shall offer to enter into an agreement
(the "Furnishing Agreement") with ANTRA with respect to any
artist with respect to whose recordings or recorded
performances Reginald Turner (individually and collectively
hereinafter referred to as a "Principal" or "Principals") or
you have or control all or part of the recording and/or
distribution rights directly or indirectly. As used herein
"you" shall mean LGE, any Principal, or any of LGE's present
or future shareholders, or any corporation or other entity
owning or controlling any of the foregoing. Neither you nor
any Principal nor any party described above shall enter into
agreements for the Recordings or services of recording artists
during the Term except as permitted herein. You shall submit
at least five (5) Artists in each Label Period. You shall
submit each of the following artists in the Initial Label
Period (collectively, the "Initial Artists"): Shanelle Graham
p/k/a "Shiva Black" and Jamal Brown; it being the intention of
the parties hereto that you cannot deliver the services of any
of the Initial Artists to a third party. In the event you fail
to submit at least five (5) proposed artists within the first
eighteen (18) months of each Label Period (or, if you fail to
deliver the services of the Initial Artists within the first
three months of the Initial Label Period for Shanelle Graham
and the first nine months of the Initial Label Period for
Jamal Brown), the Period shall be suspended until the date
sixty (60) days after your submission of all required proposed
artists, and the expiration of the term of the applicable
Label Period shall be extended by the length of the
suspension. Each artist whom you propose shall be submitted to
ANTRA as follows:
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(i) You shall deliver to the president and to the most
senior executive of A&R of ANTRA a finished Master
Recording or a tape "demo" recording of no less than
four (4) songs by such a proposed artist. You shall
also supply any other information which will enable
ANTRA to make an informed decision regarding the
potential of such proposed artist, including without
limitation the date(s) and location(s) of any live
personal appearances by such artist which are then
known to you together with pictorial and biographical
material (to the extent available). Concurrently
therewith you will send a notice to ANTRA's Vice
President of Business and Legal Affairs, indicating
that you are submitting an artist. At ANTRA's
election and expense, ANTRA may require, in addition
to or in lieu of the foregoing demo tapes, a personal
audition by such proposed artist at a place
designated by ANTRA. Notwithstanding anything
contained herein, in connection with Shanelle Graham,
you shall deliver master recordings constituting a
full length album (including all interludes) within
ninety (90) days after the full execution of this
Agreement; such master recordings shall include
finished, mixed and mastered versions of recordings
you previously played for Joseph Marrone of ANTRA.
(ii) If within thirty (30) business days from the receipt
of the material set forth above (or the audition
described in (i) above, if such is requested) ANTRA
has not accepted in writing such artist, ANTRA shall
be deemed to have rejected such artist. In such
event, you shall have no right to enter into
recording agreements relating to such rejected
artists during the term.
(b) Your submission to ANTRA of any artist shall constitute your
warranty and representation that there is (or will be within
ten (10) days after ANTRA's notification to you of its
acceptance of such artist) a contract covering such artist's
recording services which enables you to perform your
obligations to ANTRA under this agreement and that such
contract shall be in accordance with the terms of the
Furnishing Agreement attached as Annex A hereto and
incorporated herein (hereinafter the "Artist Agreement"). An
accepted artist is sometimes referred to herein as an
"Artist." You and ANTRA shall be deemed to have entered into a
Furnishing Agreement in the form attached hereto as "Annex A"
with respect to each Artist submitted by you and accepted by
ANTRA hereunder, and the terms and conditions under which you
shall deliver the Recordings of such Artist shall be governed
solely by the provisions of this agreement and the Furnishing
Agreement with respect thereto. You agree with respect to each
Artist accepted hereunder to have such Artist execute a
document in the form of Exhibit A to the Furnishing Agreement
(the "Inducement Letter"); you and ANTRA shall be deemed to
have entered into a Furnishing Agreement with respect to an
Artist upon the
<PAGE>
terms of "Annex A," as modified thereafter in accordance with
this letter agreement as of the date on which ANTRA accepts
such Artist, except that ANTRA may at any time refuse to
continue to perform thereunder until you have delivered to
ANTRA a copy of the Artist Agreement and Inducement Letter
signed by Artist and all other applicable parties.
Notwithstanding anything contained herein, if any Artist you
furnish hereunder is less than 18 years of age, you will
undertake all required legal and other proceedings to assure
that contracts entered into between you and such Artist and
between ANTRA and such Artist (in connection with the
Inducement Letter, for example), will not be subject to
rejection by such Artist because such Artist is less than the
age of 18.
(c) Except as specifically provided otherwise, you shall enter
into agreements with Artists in a form substantially similar
to the form of the Furnishing Agreement as annexed hereto,
except where such terms are specifically related to you and
not Artist. In no event shall you grant an Artist any right or
agree to any restriction or obligation greater than granted to
you in the Furnishing Agreement. In no event shall you modify
such agreement (for example, but without limitation, rights
with respect to option periods), without ANTRA's consent.
Accordingly, notwithstanding the termination of this
agreement, the provisions of the Furnishing Agreement with
respect to each Artist will continue in effect.
(d) It is understood that although both this agreement and the
Furnishing Agreement annexed hereto as Annex A refer to
"Term", "initial period" and " option period" such references
to the term of the agreements are not intended to be
coterminous, i.e., such terms used herein refer to the periods
of this agreement and such terms as used in the Furnishing
Agreement refer to the periods of the Furnishing Agreement
unless indicated otherwise. Accordingly, notwithstanding the
expiration or termination of the terms of this agreement, the
provisions of the Furnishing Agreement with respect to each
Artist will continue in effect.
(e) In the event of any inconsistency or contradiction between
this agreement and a Furnishing Agreement, the terms of this
agreement shall govern.
3. Obligations of LGE.
(a) Album Artwork.
(i) In connection with each Album delivered hereunder, you
shall prepare at your expense all Album Artwork (as
hereinafter defined) and shall deliver camera-ready copies
thereof to ANTRA not later than concurrently with the delivery
of the master recordings for the applicable Album.
Notwithstanding the foregoing, you shall not commence the
production of any Album Artwork until ANTRA has approved the
concept
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for such Album Artwork and the individuals whom you intend to
engage to produce such Album Artwork. As used herein, the term
"Album Artwork" means all artwork, photography and related
materials, including without limitation all camera-ready
mechanicals in disc, tape, CD and any other configuration
required by ANTRA, for the packaging of each Album of each
Recording Commitment in connection with this Agreement.
(ii) All Album Artwork shall contain all such materials,
information, logos and other items that ANTRA customarily
includes on its album packaging for albums (including, if
applicable, advisory labels concerning lyrics), shall conform
with the template ANTRA generally uses for its releases, shall
not contain any readily-identifiable third-party product or
logo, and shall be, in all respects, in conformity with all
applicable governmental rules and regulations. All Album
Artwork shall be subject to ANTRA's reasonable approval. ANTRA
shall advise, consult with and assist you with respect to the
foregoing requirements for the legal and manufacturing
elements of Album Artwork.
(iii) Upon your delivery of Album Artwork for a particular
Album, ANTRA shall determine the cost for the manufacture of
packaging therefrom. If ANTRA determines that the
manufacturing costs for any configuration will exceed ANTRA's
then-current standard manufacturing costs for such
configuration, ANTRA shall notify you prior to manufacturing
packaging from such Album Artwork and give you the opportunity
to redesign such Album Artwork so that the manufacturing costs
do not exceed such standard costs. If you do not redesign the
applicable Album Artwork to come within ANTRA's standard costs
in all configurations within ten (10) days after ANTRA's
notice to you, ANTRA shall have the right, at its election, to
(i) create different Album Artwork for such album if it is not
reasonably possible for ANTRA to re-design such Album Artwork
to come within ANTRA's standard costs (in which event you
shall promptly repay to ANTRA all amounts paid or incurred by
ANTRA in connection with such Album Artwork, and if you fail
to do so, ANTRA may, in addition to its other rights and
remedies, recoup such amounts from any and all advances,
royalties, mechanical royalties and other monies payable
hereunder), (ii) redesign the Album Artwork as provided by you
to come within such standard costs in all configurations, or
(iii) use the Album Artwork provided by you, in which case you
shall pay such excess manufacturing costs to ANTRA upon demand
and, in addition to all of its other rights and remedies,
ANTRA shall have the right to withhold a reserve from any
monies otherwise payable hereunder in an amount reasonably
related to the estimated amount of such excess and to recoup
such excess from any and all monies payable hereunder.
(iii) In the event you do not deliver Album Artwork for any
Album prior to or concurrently with the delivery of the master
recordings for such
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Album, ANTRA shall have the right to prepare such Album
Artwork. Upon submission to you by ANTRA of a bill for the
cost to prepare such Album Artwork, you shall promptly within
fifteen (15) days reimburse ANTRA for the cost to prepare such
Album Artwork; if you fail to make such payment, ANTRA shall
have the right to deduct such amounts from any monies payable
hereunder.
(b) Street Teams. In connection with each Record delivered
hereunder, you shall hire or cause to be hired at your expense
national "street" promotion teams to promote Records released
hereunder throughout the United States, including without
limitation, in retail stores, clubs, schools, record pools,
parties, parks, concerts, sporting events, magazines,
newsletters and tip sheets, restaurants, malls and arcades.
Such street promotion should include, without limitation,
flyers, stickers and snipes.
4. Territory.
The territory of this agreement and of each Furnishing Agreement shall
be the universe.
5. Obligations of Principal.
This agreement is expressly conditioned on the following:
(a) It is understood and agreed that the active participation of
the Principals in your business affairs, and their active
participation in the performance of your obligations hereunder
are a vital part of this agreement. During the term, the
Principals shall render their services related to the
recording industry exclusively to ANTRA. Neither you nor any
Principal may have a direct or indirect interest in any
Recording or recording agreement unless such Recording or
agreement is subject hereto.
(b) In the event of the death or incapacity of any Principal
and/or in the event that any Principal shall cease for
whatever reason to be actively engaged in your management in a
controlling capacity or shall cease to perform his obligations
hereunder or under the Furnishing Agreements, ANTRA shall have
the right, without liability of any kind whatsoever, by giving
you written notice thereof, (i) to terminate the Term of this
agreement, as of the date of such notice subject to ANTRA's
other rights herein; (ii) to continue with the term of this
agreement (subject to ANTRA's rights and/or remedies provided
herein and in the Furnishing Agreements); and/or (iii) in the
event of such cessation of services is not caused by death or
permanent incapacitation, to demand and receive from you the
return of all unrecouped Advances hereunder. Notwithstanding
the foregoing, in the event that ANTRA terminates the Term of
this agreement pursuant to
<PAGE>
this paragraph, ANTRA's obligations regarding Advances and
royalties shall be set forth in your agreement with the
Artist concerned.
(c) In connection with each Record to be released by ANTRA
hereunder,
6. Advances.
(a) Except as otherwise specifically provided herein, all monies
paid to you, or paid at your request, or paid by ANTRA on your
behalf during the Term of this agreement or of the Furnishing
Agreements (other than royalties paid pursuant to Article 11
of the Furnishing Agreements) shall be deemed Advances against
and recoupable from royalties payable pursuant to the
Furnishing Agreements as provided in paragraph 7 below.
(b) During each Label Period (the initial Label Period and the
Label Option Period), ANTRA will advance Recording Costs
incurred in connection with the creation of demonstration
recordings for artists that are submitted for ANTRA's
consideration hereunder, provided you submit a budget in
advance of commencing such recordings and such Recording
Costs, as embodied in the budget, have been pre-approved by
ANTRA. Any and all such Recording Costs incurred in connection
with a submitted artist who becomes an Artist hereunder shall
reduce and be deducted from the Recording Fund for the first
Album to be Delivered by you for the Artist concerned.
7. Royalties.
(a) Pursuant to Article 7 of the Furnishing Agreements, ANTRA has
agreed to pay you certain royalties in connection with the
sale of records thereunder. The royalties set forth therein
are inclusive of any royalty you may be required to pay the
Artist, the individual producer of any Masters and any other
third parties, and you shall be solely responsible for the
payment of royalties to (i) each Artist in accordance with the
exclusive recording agreement between you and each such Artist
("Artist Agreement") and (ii) each individual producer of the
Masters. You shall notify ANTRA of the royalty which you must
pay each Artist in accordance with the Artist Agreement as
well as any royalty which you must pay an independent third
party producer (i.e., excluding Principal, Artist, or any
person under contract to you or Artist). With respect to each
Artist, the royalties payable to Artist and the independent
producers shall be called the "Artist Share." The share of
royalties pursuant to Article 7 of the Furnishing Agreements
retained by you after payment of the Artist's Share shall be
called the "Label Share." The royalty provisions of the Artist
Agreements shall be such that in no event shall the Label
Share with respect to any Artist be less than four percent
(4%) on USNRC Net Sales of LPs (with
<PAGE>
proportionate reductions on all sales for which reduced
royalties are payable under the Furnishing Agreements). The
Term "Label Share" as used in this agreement and the
Furnishing Agreements shall also sometimes be deemed to refer
to all the label Shares of the Furnishing Agreements
collectively.
(b) All advances or other offsets with respect to a particular
Artist (as distinguished from such payments made to you which
do not flow to the benefit of a particular Artist) shall be
recouped vis-a-vis the Artist at the Artist Share royalty
rate. All Advances made by you to any Artist shall be charged
to that Artist's royalty account. If an Artist account is so
recouped, then ANTRA shall make applicable royalty payments on
your behalf, to such Artist.
(c) The Label Share with respect to recordings of any particular
Artist may be used to recoup any Advances or other offsets
with respect to such Artist which have not been recouped from
Artist Share or may be used to recoup any Advances which may
be made to you.
(d) You or Artist shall be responsible for engaging any producer
rendering producing services under a Furnishing Agreement. Any
such agreement with a producer must provide that such producer
will be responsible for any recording Costs which cause the
Artist to exceed the budget or Recording fund (as the case may
be) provided in the Furnishing Agreement applicable to such
Artist, and that, in addition to any other remedies ANTRA may
have, such overage may be used as an offset against any
amounts payable to such producer. Any such agreement shall
also provide that the Producer shall look solely to you for
payment of his advances, fees, royalty accountings and
payments. To the extent such royalties in the producer account
exceed advances paid to such producer and other amounts which
may be offset against such royalties, you or Artist shall
timely and properly make such excess payments to such
producer.
8. Direct Engagement.
In the event ANTRA exercises or intends to exercise its right to extend
a Furnishing Agreement for an option period and you do not desire to
continue to furnish such Artist's services, then you shall so advise
ANTRA and, if ANTRA so elects, you shall assign ANTRA all your rights
from such date onwards with respect of such Artist and such Artist's
Recordings, and you shall have no interest therein.
9. Furnishing Agreements.
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It is understood that the Furnishing Agreements contain various
obligations on ANTRA's part which relate to a particular Artist and not
to other Artists. Accordingly, your remedies relating to obligations
regarding one Artist's Furnishing Agreement shall not apply to other
Furnishing Agreements.
10. Incorporation By Reference.
The terms and conditions of the Furnishing Agreements are incorporated
herein by reference as fully and completely as if set forth herein,
including, but not limited to, all recitals, warranties and
acknowledgments therein. Any word not specifically herein defined shall
bear the meaning ascribed to it in the Furnishing Agreements. In
particular but without limitation, the validity, construction,
jurisdiction, cure, recourse, and notice provisions of the Furnishing
Agreement shall be deemed to govern this agreement.
11. Unique Services.
You acknowledge that the Principal's services hereunder and the rights
and privileges granted to ANTRA in connection with the Principal's
abilities as a talent finder and record company executive are of a
special, unique, unusual, extraordinary and intellectual character
which gives them a peculiar value, the loss of which cannot be
reasonably or adequately compensated for in damages in an action at
law, and that a breach by the Principal of the provisions of this
agreement will cause ANTRA great and irreparable injury and damage, and
that ANTRA shall be entitled to injunctive and other equitable relief,
in addition to whatever legal remedies are available to ANTRA, to
prevent or cure any such breach or threatened breach.
12. Compensation.
Neither you nor Principal shall be entitled to any compensation for
your services hereunder, except as specifically set forth herein or in
the Furnishing Agreement.
13. Marketing.
Provided that an inadvertent failure to consult with you will not be
deemed a breach hereof, at your request, during the term hereof, ANTRA
will endeavor to consult with you regarding the initial United States
marketing campaign in connection with each Album Delivered in
fulfillment of a Recording Commitment under each Furnishing Agreement
hereunder.
14. Entire Agreement.
This writing sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof, and no modification,
amendment, waiver, or discharge of this document shall be binding upon
you or us unless confirmed by a
<PAGE>
written instrument signed by an officer of the company to be charged.
No waiver of any provision of or default under this agreement nor any
failure to exercise rights hereunder shall prejudice our rights or your
rights thereafter, nor shall it form precedent for the future.
If the foregoing corresponds to your understanding as it does ours,
please so indicate by signing below.
Very truly yours, AGREED AND ACCEPTED:
ANTRA MUSIC GROUP, INC. LEGAL GRIND
ENTERTAINMENT, INC.
By:/s/ By:/s/
----------------------- --------------------------
An Authorized Signatory
Federal Tax ID No. 95-4693760
<PAGE>
ANNEX A
ANTRA MUSIC GROUP, INC.
1515 Locust Street
Philadelphia, PA 19102
Dated: As of October 28, 1999
Legal Grind Entertainment, Inc.
9424 Dayton Way, Suite 250
Beverly Hills, CA 90210
Attn: Reginald Turner
Dear Reginald:
The following constitutes your and our agreement ("Contract"):
1. Services. During the term of this Contract ("Term") you shall, in
accordance with the provisions hereof, furnish to us in the Territory the
exclusive recording services of ____________ p/k/a ____________(hereinafter
collectively and individually referred to as "Artist") and furnish to us the
services of one (1) or more producers for the purpose of recording and
delivering to us Masters featuring the performances of Artist.
2. Term.
(a) The Term shall consist of an "Initial Period" and of the
"Renewal Periods" for which we shall have exercised the options
hereafter provided. We shall have seven (7) separate options, each to
extend the Term for a Renewal Period. The Initial Period and each
Renewal Period are each hereafter sometimes referred to generally as a
"Contract Period." Each Renewal Period is hereafter sometimes referred
to respectively in chronological order as the "First Renewal Period,"
"Second Renewal Period," "Third Renewal Period," "Fourth Renewal
Period," "Fifth Renewal Period," "Sixth Renewal Period" and "Seventh
Renewal Period." We may exercise each option to extend the Term for a
Renewal Period by giving you notice of our election to do so at any
time prior to the commencement of the Renewal Period for which our
option is exercised;
(b) (i) The Initial Period shall commence on
the date hereof and shall continue until the date nine (9)
months, or such fewer number of days of which we may advise
you in writing, after the initial release in the United
States, if any, of the Album required to be delivered to us in
fulfillment of the "Recording Commitment" (defined below)
hereunder for the Initial Period, which initial release, for
purposes of this subparagraph 2(b)(i) only, shall be deemed to
occur on the earlier of: (1) the date of the actual initial
release in the United States, if any, of that last Album; or
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(2) the date that is one hundred twenty (120) days
after your delivery to us of that last Album. No days between
November 15 and February 15 of the next calendar year shall
be taken into account for purposes of determining the duration
or end of that one hundred twenty (120) day period referred
to in the immediately preceding sentence; and
(ii) Each Renewal Period shall run consecutively,
shall commence upon the expiration of the immediately
preceding Contract Period and shall continue until the date
nine (9) months, or such fewer number of days of which we may
advise you in writing, after the initial release in the United
States, if any, of the Album required to be delivered to us in
fulfillment of the Recording Commitment for that Renewal
Period, which initial release, for purposes of this
subparagraph 2(b)(ii) only, shall be deemed to occur on the
earlier of: (1) the date of the actual initial release in the
United States, if any, of that last Album; or (2) the date
that is sixty (60) days after your delivery to us of that last
Album. No days between November 15 and February 15 of the next
calendar year shall be taken into account for purposes of
determining the duration or end of that sixty (60) day period
referred to in the immediately preceding sentence; and
(c) Notwithstanding the foregoing, if as of the last date on
which we have the right to extend the Term for a Renewal Period
pursuant to subparagraph (b)(i) or (b)(ii) above, we have failed to
exercise our option to extend the Term for the next Renewal Period, the
then-current Contract Period nonetheless shall continue until you
notify us in writing of that failure, referring specifically to this
subparagraph 2(c). If we fail to exercise our option to extend the Term
for the next Renewal Period on or before the date that is sixty (60)
days after we receive that specific written notice from you, then the
Term shall end on the date that is sixty (60) days after we receive
that notice from you, as if that date were the original expiration date
of the Term, without any liability or additional obligation to you in
connection therewith.
3. Recording Commitment.
(a) Your "Recording Commitment" is as follows: During each
Contract Period, you shall deliver to us, at a minimum, commercially
satisfactory Masters featuring the vocal performances of Artist
sufficient to constitute one (1) LP, plus, at our option, Masters
sufficient to constitute one additional (1) Optional LP; provided,
however, that in the aggregate, without your prior consent, you shall
not have the obligation to deliver to us hereunder in excess of seven
(7) Required Albums. We may exercise our option for the Optional LP to
be recorded and delivered to us during a Contract Period by giving you
reasonable, written notice of our election to do so at any time prior
to the expiration of that Contract Period. Each Album required to be
delivered to us in fulfillment of your Recording Commitment is
hereinafter sometimes referred to generally as a "Required Album."
Accordingly, you might be required to deliver to us as many as seven
(7) Required Albums. The Required Albums are sometimes referred to as
the "First Album," "Second Album," "Third Album," "Fourth Album,"
"Fifth Album, "Sixth Album" and "Seventh Album," respectively; and
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(b) You shall deliver to us the First Album no later than
ninety (90) days after the date hereof. During each Renewal Period, you
shall deliver to us the Required Album no later than three (3) months
after the commencement of the particular Renewal Period. You shall not
without our prior written consent (which we shall not unreasonably
withhold), however, either (i) commence the recording of any Masters
for any Required Album prior to the date that is ten (10) months after
the date of your delivery to us of the immediately-prior Required Album
or (ii) deliver to us a Required Album prior to the date that is twelve
(12) months after the date of your delivery to us of the
immediately-prior Required Album. Notwithstanding anything to the
contrary contained herein, you shall deliver to us each Required Album
as and when required hereunder so that all eight (8) Required Albums
are delivered to us within seven (7) years after the date hereof.
4. Recording Procedures.
(a) You shall designate and submit to us for our approval the
producer of each of the Masters, the Musical Compositions or other
Selections which shall be embodied in those Masters, all other
individuals rendering services in connection with the recording of
those Masters, the studios at which those Masters shall be recorded,
and the dates of recording of those Masters (collectively referred to
as "Recording Elements"). You shall also prepare and submit to us for
our approval, a proposed budget for all "Recording Costs" (as defined
below) setting forth in such detail as is reasonably required by us all
costs and expenses to be paid or incurred for the production, recording
and delivery to us of the Masters ("Recording Budget"). No recording
sessions shall be commenced nor shall any commitments be made or costs
incurred hereunder with respect to any Masters unless and until we
shall have approved in writing each Recording Element and the Recording
Budget for those Masters. If we shall disapprove of any Recording
Element submitted by you or of the Recording Budget submitted by you,
then our decision (including, at our election, our designation of the
Recording Budget or of one (1) or more Recording Elements in
substitution for the Recording Budget or any Recording Elements
submitted by you and disapproved by us) shall be final;
(b) You shall furnish to us at such times as we shall require
all union contract forms, report forms, invoices and other information
that we shall require so that we promptly may pay all Recording Costs,
otherwise comply with any of our obligations in connection with the
Masters, release Phonograph Records embodying the Masters and otherwise
exploit the Masters;
(c) At our election, recording sessions for the Masters shall
be conducted under our or our designee's recording license;
(d) Our representatives may attend recording sessions for the
Masters;
(e) You shall deliver to us the Masters promptly after their
completion. All original session tapes and any derivatives or
reproductions thereof shall be delivered to us concurrently, or, at our
election, maintained at a recording studio or other location
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designated by us, in our name and subject to our control. Each Master
shall be subject to our approval as commercially and technically
satisfactory for the manufacture and sale of Phonograph Records, and,
upon our request, you shall re-record any Musical Composition or other
Selection until a Master that is commercially and technically
satisfactory to us shall have been obtained;
(f) Each Master shall embody Artist's vocal and instrumental
performances as the sole featured artist of a single Musical
Composition and shall be newly-recorded in its entirety in a recording
studio. Accordingly, no Masters shall be recorded in whole or in part
at live concerts or other live performances. Each Required Album shall
embody recordings of no fewer than ten (10) and no more than thirteen
(13) Musical Compositions. You shall not record or deliver hereunder
nor shall we be obligated to accept Masters constituting a Multiple
Album. If, however, you shall do so and we shall accept those Masters
hereunder, then, at our election, for the purpose of calculating the
number of Masters recorded and delivered hereunder, those Masters shall
be deemed to constitute only one (1) Album;
(g) Any Master Recording which is not recorded or delivered in
all respects in accordance with the terms hereof shall not apply
towards the fulfillment of your Recording Commitment, unless we
otherwise consent in writing. Furthermore, if we shall make any
payments with respect to any Master Recording which is not recorded for
or delivered to us in all respects in accordance with the terms hereof,
you shall pay to us, upon our demand, the amount thereof and, without
limiting our other rights and remedies, we may deduct that amount paid
or incurred by us for any reason from any monies payable by us
hereunder; and
(h) If for any reason you delay the commencement of or you or
Artist are unavailable for any recording sessions for the Masters, you
shall pay us, upon our demand, an amount equal to the expenses or
charges paid or incurred by us by reason thereof. Without limiting our
other rights and remedies, we may deduct that amount paid or incurred
by us for any reason from any monies payable to you and/or Artist by us
hereunder.
5. Recording Costs.
(a) We shall pay the Recording Costs of those Masters recorded
at recording sessions conducted in accordance with the terms hereof in
an amount not in excess of the approved Recording Budget. If the
Recording Costs of any Masters shall exceed the Recording Budget
therefor designated by us or approved by us in writing for any reason,
you shall be solely responsible for and shall pay promptly the excess.
If, however, we pay the excess, you shall pay to us, upon our demand,
the amount thereof and, without limiting our other rights and remedies,
we may deduct all such amounts paid or incurred by us for any reason
from any monies payable to you and/or Artist by us hereunder. You shall
be solely responsible for and shall pay any payments to any individuals
rendering services in connection with the recording of the Masters
which exceed union scale unless the excess and the recipient thereof
shall have been specified in the approved Recording Budget. You
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shall also be solely responsible for and shall pay any penalties
incurred for late payments caused by your or Artist's delay in
submitting union contracts forms, report forms, or invoices or other
documents. If, however, we pay any excess not approved by us in writing
or any penalties, you shall pay to us, upon our demand, the amount
thereof, and, without limiting our other rights and remedies, we may
deduct that amount from any monies payable to you and/or Artist by us
hereunder; and
(b) The term "Recording Costs" shall include, without
limitation, all minimum union scale payments made to you or Artist, all
payments made to any other individuals rendering services in connection
with the production and recording of the Masters (including, without
limitation, the individual producers and co-producers of the Masters),
all other payments which are made pursuant to any applicable law or
regulation or the provisions of any collective bargaining agreement
between us and any union or guild (including, without limitation,
payroll taxes and payments to union pension and welfare funds and/or
health and retirement funds), all amounts paid or incurred for studio
or hall rentals, tape, engineering, editing, mixing, remixing,
instrument rentals and cartage, mastering, transportation and
accommodations, immigration clearances, trademark and service mark
searches and clearances, any so-called "per diems" for any individuals
(including you or Artist) rendering services in connection with the
recording of the Masters, together with all other amounts paid or
incurred in connection with the production, recording and delivery to
us of the Masters. Recording Costs shall be recoupable from royalties
payable by us hereunder.
6. Rights.
(a) All Master Recordings and Audio-Visual Recordings recorded
during the Term which embody Artist's performances, from the inception
of the recording thereof, and all artwork created for use in connection
with any reproduction thereof ("Artwork") shall be deemed, for purposes
of copyright law throughout the universe, works made for hire for us
and all other persons rendering services in connection with those
Master Recordings, Audio-Visual Recordings and Artwork as our employees
for hire. Those Master Recordings and Audio-Visual Recordings, from the
inception of the recording thereof, and all Phonograph Records and
other reproductions made therefrom, together with the performances
embodied therein and all copyrights therein and thereto and all
renewals and extensions thereof, and all Artwork and all copyrights in
and to all Artwork and all renewals and extensions thereof, shall be
entirely our property throughout the universe, free of any claims
whatsoever by you or Artist, or any other person, firm, or corporation.
Accordingly, we shall have the exclusive right to obtain registration
of copyright (and all renewals and extensions) throughout the universe
in those Master Recordings, Audio-Visual Recordings and Artwork in our
name, as the owner and author thereof. If for any reason we shall be
deemed not to be the author of those Master Recordings, Audio-Visual
Recordings or Artwork, this Contract shall constitute an irrevocable
transfer to us of ownership of copyright (and all renewals and
extensions) throughout the universe in those Master Recordings,
Audio-Visual Recordings or Artwork (as applicable) and, accordingly,
you and Artist hereby grant, transfer, convey and assign directly to us
the entire right, title and interest throughout the universe,
including, without
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limitation, the copyright, the right to secure copyright registration
and any and all copyright renewal rights, in and to all Master
Recordings and Audio-Visual Recordings recorded during the Term which
embody Artist's performances and in and to all Artwork;
(b) You shall, upon our request, cause to be executed and
delivered to us transfers of ownership of copyright (and all renewals
and extensions) in those Master Recordings, Audio-Visual Recordings and
Artwork and any other documents as we may deem necessary or appropriate
to vest in us the rights granted to us in this Contract, and you hereby
irrevocably appoint us your attorney-in-fact for the purpose of
executing those transfers of ownership and other documents in your
names;
(c) Without limiting the generality of the foregoing, we and
any person, firm, or corporation designated by us shall have the
exclusive, perpetual right throughout the universe to manufacture,
sell, distribute and advertise Phonograph Records, Audio-Visual Records
and other reproductions embodying those Master Recordings or
Audio-Visual Recordings under any trademarks, trade names or labels,
and to lease, license, convey and otherwise exploit and use those
Master Recordings by any method (whether now known or unknown) and in
any medium (whether now known or unknown) and to perform publicly
Phonograph Records, Audio-Visual Records and other reproductions
embodying those Master Recordings or Audio-Visual Recordings, all upon
such terms as we may approve, or we may refrain from doing any or all
of the foregoing;
(d) If you or Artist are entitled to any reversion of the
copyright or other right, title and interest in and to Masters (or any
of them) pursuant to the laws of the United States or any other country
of the world, and that reversion is effected, then you and Artist
hereby irrevocably license to us exclusively the entire worldwide
right, title and interest, including, without limitation, the copyright
in and to any such Master so acquired by you or Artist pursuant to the
laws of the United States or any other country of the world, all for
the duration of the copyright (and any renewals or extensions thereof)
in and to such Master ("License Period"). In that event, we and any
person, firm or corporation designated by us shall have the exclusive
right throughout the universe during the License Period to manufacture,
sell, distribute and advertise Phonograph Records, Audio-Visual Records
and other reproductions embodying the Masters or Audio-Visual
Recordings under any trademarks, trade names or labels or to lease,
license, convey and otherwise exploit and use those Masters or
Audio-Visual Recordings by any method (whether now known or unknown)
and in any medium (whether now known or unknown) and to perform
publicly Phonograph Records, Audio-Visual Recordings and other
reproductions embodying the Masters or Audio-Visual Recordings all upon
such terms as we may approve, or we may refrain from doing any or all
of the foregoing, all in accordance with the provisions of this
Contract. We shall have no obligation to pay to you or Artist any
monies in connection with the grant set forth in this subparagraph 6(d)
except that we shall continue to credit to your royalty account
hereunder royalties earned by you in accordance with the provisions
hereof on exploitations of the Masters occurring during the License
Period as if we had continued to own the entirety of all right, title
and interest, including, without limitation, the copyright in and to
the Masters or Audio-Visual Record Recordings in accordance with the
provisions of subparagraph 6(a), (b) and (c) above. You expressly
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acknowledge and agree that no provision of any applicable law, rule or
regulation (including, without limitation, the copyright laws and
regulations of the United States or Canada) permits you or Artist to
terminate the transfer, grant, conveyance or assignment to us of the
copyright in and to Master Recordings or Audio-Visual Recordings
provided in this paragraph 6 or any other reversion of the copyright or
other right, title and interest in and to the Masters. If any such law,
rule or regulation shall apply at any time after the date hereof, you
and Artist shall not exercise any rights pursuant to that law, rule or
regulation; and
(e) All matters relating to trademarks, notices, including,
without limitation, UPC symbols (i.e., barcoding), or disclosures
deemed advisable by us or our attorneys, and any matter other than the
cover layout and the picture of the art to be used on the particular
Required Album will be determined by us in our sole discretion.
7. Name and Likeness.
(a) We and any person, firm or corporation designated by us
shall have the perpetual, worldwide right to use and to permit others
to use your and Artist's name (both legal and professional, and whether
presently or hereafter used by you or Artist), likeness, and other
identification, and biographical material concerning you and Artist,
and the name and likeness of any producer rendering services in
connection with Master Recordings recorded during the Term for purposes
of trade and advertising. We shall have the further right to refer to
you and Artist during the Term as our exclusive recording artist and
you and Artist in your activities in the entertainment field shall use
reasonable efforts to be billed and advertised during the Term as our
exclusive recording artist. The fights granted to us pursuant to this
subparagraph 7(a) with respect to your and Artist's name, likeness,
other identification and biographical material concerning you and
Artist shall be exclusive during the Term and nonexclusive thereafter.
Accordingly, but without limiting the generality of the foregoing, you
and Artist shall not authorize or permit any person, firm, or
corporation other than us to use during the Term your or Artist's legal
or professional name or your or Artist's likeness in connection with
the advertising or sale of Phonograph Records. Notwithstanding anything
to the contrary contained herein, during the Term, you and Artist shall
not use any name other than the professional name utilized by you and
Artist as of the date of this Contract without first obtaining our
prior written consent thereto;
(b) You and Artist are the sole owners of each of your
respective professional names used by you and Artist during the Term
and no other person, firm or corporation has or will have the right to
use that name in connection with Phonograph Records during the Term. We
shall have the right, at our election, to cause a search to be
instituted to determine whether there have been any third party uses of
any names used by you and Artist for Phonograph Record purposes.
Further, we shall have the right, at our election, to apply for
registration of your and/or Artist's names to be made in favor of you
and/or Artist for Phonograph Record and/or other entertainment purposes
in the United States Patent and Trademark Office or such other federal
institution as may then be charged with accepting those registrations.
Any amounts paid by us in connection with any search or
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registration shall be deemed to be Recording Costs pursuant to
subparagraph 5(b) above. If any search undertaken by us indicates or
leads us reasonably to believe that your and/or Artist's name should
not be used hereunder, then you and/or Artist (as the case may be) and
we shall determine mutually a substitute name to be used. Nothing
contained herein shall release you from your indemnification of us in
respect of our use of any of your and/or Artist's names, whether legal
or professional or otherwise; and
8. Advances. We shall pay to you as advances recoupable from royalties
earned by you and Artist hereunder the following amounts for the following
Required Albums payable at the following times:
(a) For the First Album, Ten Thousand Dollars ($10,000),
payable promptly after the execution of this Contract and Forty
Thousand Dollars ($40,000) on or before November 23, 1999 (collectively
the "Execution Advance"), and the Fund Balance (defined below) payable
promptly after the "Delivery Date" (defined below) for the First Album.
The "Recording Fund" for the First Album shall be Two Hundred Fifty
Thousand Dollars ($250,000); and
(b) For each Required Album other than the First Album: (A)
the "Pre-Delivery Payment" (defined below), payable promptly after our
receipt of your written notice indicating that recording sessions for
the Required Album for which the advance is payable have actually
commenced in accordance with all of the terms of this Contract
(including, without limitation, the provisions of subparagraph 4(a)
above); and (B) the Fund Balance (defined below), payable promptly
after the Delivery Date. For each Required Album, if any, after the
First Album, the Recording Fund shall be the amount set forth in the
Schedule below:
SCHEDULE
(c) The term "Pre-Delivery Payment" shall mean an amount equal
to five percent (5%) of the "Amount" for the applicable Required Album
set forth in the Schedule above. The term "Fund Balance" shall mean the
amount by which the Recording Fund exceeds the aggregate of the
Recording Costs for the applicable Required Album, the Pre-Delivery
Payment for the applicable Required Album (or the Execution Advance
with respect to the First Album) and any other advances paid in
connection with the applicable Required Album. The term "Delivery Date"
shall mean the later of the date of your delivery to us of all Masters
constituting the applicable Required Album in accordance with all of
the terms of this Contract and the date on which we determine the
aggregate Recording Costs for that Required Album; and
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(d) You acknowledge and agree that any and all advances paid
by us hereunder shall constitute prepayment of session union scale to
you and/or Artist, and you and Artist agree to timely complete and
appropriately deliver any documentation required by the applicable
union to document and effectuate each such prepayment.
8A. Minimum Annual Compensation
(a) The aggregate amount of the compensation paid to you under
this agreement shall not be less than the "Designated Dollar Amount" (as defined
below) per Fiscal Year. "Fiscal Year", in this paragraph, means the annual
period beginning on the date of commencement of the Term, and each subsequent
annual period through the seventh such annual period, during the Term.
(b) If you have not received compensation equal to the
Designated Dollar Amount under this agreement for a Fiscal Year, we shall pay
you the amount of any deficiency before the end of that Fiscal Year; at least
forty (40) days before the end of each Fiscal Year you shall notify us if you
have not received compensation equal to the Designated Dollar Amount under this
agreement for that Fiscal Year, and of the amount of the deficiency. Each such
payment shall constitute an Advance and shall be applied in reduction of any and
all monies due or becoming due to you under this agreement. We may not withhold
or require you to repay any payment made to you pursuant to or subject to this
paragraph 8A.
(c) As used in this paragraph 8A, the "Designated Dollar
Amount" shall be:
(1) Nine Thousand Dollars ($9,000) for the first
Fiscal Year of this agreement;
(2) Twelve Thousand Dollars ($12,000) for the second
Fiscal Year of this agreement; and
(3) Fifteen Thousand Dollars ($15,000) for each of
the third through seventh Fiscal Years of this agreement.
If in any Fiscal Year the aggregate amount of the compensation paid to you under
this agreement exceeds the Designated Dollar Amount, such excess compensation
shall apply to reduce the Designated Dollar Amount for any subsequent Fiscal
Years.
(d) You acknowledge that this paragraph is included to avoid
compromise of our rights (including our entitlement to injunctive relief) by
reason of a finding of applicability of California law, but does not constitute
a concession by us that California law is actually applicable.
9. Royalties.
(a) In consideration of our copyright ownership set forth
herein, any rights licensed to us herein, our right to use your and
Artist's name, likeness and biographical
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materials as provided herein, and the other agreements, representations and
warranties contained herein, on Net Sales of Phonograph Records embodying
Masters, we shall pay to you a royalty computed by multiplying the Royalty Base
Price, less the deductions hereafter provided, by the applicable royalty rate
set forth below:
(i) On Phonograph Records sold in the United States the
royalty rate shall be:
(A) Eighteen percent (18%) on the First Album, Second
Album, Third Album, Fourth Album, Fifth Album, Sixth
Album and Seventh Album;
(B) Eleven percent (11%) on Singles;
(ii) On Phonograph Records sold in Canada the royalty rate
shall be:
(A) Fourteen percent (14%) on Albums; and
(B) Nine percent (9%) on Singles;
(iii) On Phonograph Records sold in the United Kingdom the
royalty rate shall be:
(A) Fourteen percent (14%) on Albums; and
(B) Nine percent (9%) on Singles;
(iv) On Phonograph Records sold in Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Holland, Italy, Norway, Portugal, Spain,
Sweden or Switzerland, the royalty rate shall be:
(A) Twelve percent (12%) on Albums; and
(B) Eight percent (8%) on Singles;
(v) On Phonograph Records sold in Japan, Australia or New
Zealand, the royalty rate shall be:
(A) Twelve percent (12%) on Albums; and
(B) Eight percent (8%) on Singles; and
(vi) On Phonograph Records sold outside the United States,
Canada, the United Kingdom and those countries set forth in subparagraphs
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9(a)(iv) and (v) above, the royalty rate shall be:
(A) Nine percent (9%) on Albums; and
(B) Five and one half percent (5.5%) on Singles;
(b) Notwithstanding the foregoing:
(i) (A) On Phonograph Records sold through a direct mail or
mail order distribution method (including, without limitation through
so-called "record clubs"), or through any combination of the foregoing,
the royalty rate shall be one-half (1/2) of the otherwise applicable
royalty rate, but in no event shall your royalty in respect of those
sales exceed an amount equal to fifty percent (50%) of the Net Receipts
from the sale of those Phonograph Records (whether or not sold by an
affiliate of ours);
(B) On Phonograph Records sold through retail stores in
connection with special radio or television advertisements (sometimes
referred to as "key outlet marketing") ("Key Outlet Campaign") whether
alone or in combination with any direct mail or mail order distribution
method, the royalty rate shall be one hundred percent (100%) of the
otherwise applicable royalty rate and notwithstanding anything to the
contrary herein, we shall have the right to recoup fifty percent (50%)
of any and all of the costs paid or incurred by us or our licensees in
respect of such Key Outlet Campaigns from any and all royalties earned
by you under this Contract;
(ii) On Phonograph Records sold for use as premiums or in
connection with the sale, advertising, or promotion of any other
product or service, the royalty rate shall be one-half (1/2) of the
otherwise applicable royalty rate and the Royalty Base Price of those
Phonograph Records shall be deemed to be an amount equal to the monies
actually received by us from the sale of those Phonograph Records,
unless manufactured and sold by an affiliate or licensee of ours, in
which event the Royalty Base Price shall be deemed to be the price used
by that affiliate or licensee in accounting to us;
(iii) On Mid-Price Records the royalty rate shall be
two-thirds (2/3) of the otherwise applicable royalty rate, and on
Budget Records the royalty rate shall be one-half (1/2) of the
otherwise applicable royalty rate;
(iv) On Phonograph Records sold to the United States
Government, its subdivisions, departments or agencies (including
Phonograph Records sold for resale through military facilities) or to
educational institutions or libraries, the royalty rate shall be
one-half (1/2) of the otherwise applicable royalty rate;
(v) On Long-Play Singles, the royalty rate shall be one half
(1/2) of
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the otherwise applicable royalty rate for Albums, and on EPs the
royalty rate shall be two-thirds (2/3) of the otherwise applicable
royalty rate for Albums;
(vi) On Multiple Albums, the royalty rate shall be the lesser
of: (A) the otherwise applicable royalty rate and (B) the otherwise
applicable royalty rate multiplied by a fraction, the numerator of
which is the Royalty Base Price of the Multiple Album and the
denominator of which is the product of the Royalty Base Price of a
top-line single-disc Album in the configuration in question and the
number of discs contained in the Multiple Album;
(vii) On Phonograph Records in the form of Digital Records the
royalty rate shall be:
(A) Seventy Five percent (75%) of the otherwise
applicable royalty rate for all Digital Records other than
Compact Discs; and
(B) Eighty percent (80%) of the otherwise applicable
royalty rate on Compact Discs;
(viii) On Masters licensed by us to others for their
manufacture and sale of Phonograph Records or for any other uses (other
than those for which a royalty is payable in accordance with
subparagraph (x)(B) below), your royalty shall be an amount equal to
fifty percent (50%) of our Net Receipts from the sale of those
Phonograph Records or from those other uses of the Masters;
(ix) On Audio-Visual Recordings embodying the performances of
Artist, your royalty shall be as follows:
(A) On Audio-Visual Records your royalty shall be
computed in accordance with the provisions of this paragraph 9
applicable to Albums, except on sales of Audio-Visual Records
in the United States the royalty rate pursuant to subparagraph
9(a)(i) above shall be deemed to be eighteen percent (18%) and
on sales of Audio-Visual Records outside of the United States
the royalty rate pursuant to subparagraphs 9(a)(ii) through
9(a)(v) above shall be deemed to be twelve percent (12%).
Notwithstanding anything to the contrary contained herein, the
royalty payable to you pursuant to this subparagraph (ix)(A)
on the exploitation of Audio-Visual Recordings in the United
States or Canada shall be inclusive of any royalties or other
monies required to be paid or incurred by us (or otherwise
deducted from monies payable to us) to any person, firm or
corporation for the synchronization, reproduction and/or
public performance of any Selection in the Audio-Visual
Recording in question and, without limiting any of our other
rights or remedies hereunder or otherwise, we shall have the
right to deduct from the royalty payable to you pursuant to
this subparagraph (ix)(A) an amount equal to those sums
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required to be paid to any person, firm or corporation in
connection therewith;
(B) On Audio-Visual Records manufactured and sold by
a non-affiliated licensee of ours, however, in the United
States or elsewhere, your royalty shall be an amount equal to
fifty percent (50%) of our Net Receipts from the sale of those
Audio-Visual Records (rather than the royalty computed in
accordance with the immediately preceding subparagraph (A));
and
(C) Notwithstanding anything to the contrary
contained herein, the exploitation of Audio-Visual Recordings
by means of any so-called "video jukebox" shall be deemed to
be non-royalty bearing and promotional in nature for all
purposes of this Contract; and
(D) On Mid-Price Audio-Visual Records the royalty
rate shall be three-fourths (3/4) of the otherwise applicable
royalty rate, and on Budget Audio-Visual Records the royalty
rate shall be one-half (1/2) of the otherwise applicable
royalty rate;
(x) On New Records your royalty shall be the lesser of the
following:
(A) Seventy-five percent (75%) of the otherwise
applicable royalty rate applied to the Royalty Base Price of
the New Record concerned; and
(B) An amount equal to the product of (1) our Net
Receipts from the exploitation of those New Records, and (2)
the otherwise applicable royalty rate;
(c) Notwithstanding the foregoing:
(i) No royalties shall be payable on Phonograph Records
furnished as free or bonus Phonograph Records to members, applicants,
or other participants in any record club or other direct mail
distribution method; on Phonograph Records distributed for promotional
purposes to radio stations, television stations or networks, record
reviewers, or other customary recipients of promotional Phonograph
Records; on so-called "promotional sampler" Phonograph Records; on
Phonograph Records sold as scrap or as "cut-outs"; or on Phonograph
Records (whether or not intended for sale by the recipient) furnished
on a no-charge or free basis (such as, but not limited to, Phonograph
Records commonly described in the record industry as "free goods" or
"freebies") or sold at less than fifty percent (50%) of their regular
wholesale price to distributors, subdistributors, dealers, or others,
whether or not the recipients thereof are affiliated with us. We shall
not distribute Phonograph Records embodying solely Masters in the
United States at
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no-charge for sale by the recipient thereof other than in accordance
with our thencurrent general policy applicable at the time of our
distribution of those Records which, in the United States on the date
of this Contract, is the distribution of the following Phonograph
Records at no charge intended for sale by the recipient thereof (1) on
a regular basis, as follows: Fifteen (15) Albums and EPs in the form of
Conventional vinyl discs and cassette tapes for each eighty-five (85)
of those Albums and EPs sold (that is, fifteen (15) Albums and EPs in
the form of conventional vinyl discs and cassette tapes are distributed
at no charge out of each one hundred (100) of those Albums and EPs
distributed for sale by the recipient thereof); twenty (20) Albums and
EPs in the form of Digital Records (including, without limitation,
Compact Discs) for each eighty (80) of those Albums sold (that is,
twenty (20) Albums in the form of Digital Records are distributed at no
charge out of each one hundred (100) of those Albums distributed for
sale by the recipient thereof); and thirty (30) Singles and Long-Play
Singles in all forms and configurations for each seventy (70) Singles
and Long-Play Singles sold in any form or configuration (that is,
thirty (30) Singles and Long-Play Singles in all forms and
configurations are distributed at no charge out of each one hundred
(100) Singles and Long-Play Singles distributed in any form or
configuration for sale by the recipient thereof); and thirty (30)
Phonograph Records other than Albums, EPs, Singles and Long-Play
Singles, if any, for each seventy (70) of those Phonograph Records sold
in any form or configuration (that is, thirty (30) Phonograph Records
other than Albums, EPs, Singles and Long-Play Singles, if any, are or
would be distributed at no charge out of each one hundred (100) of
those Phonograph Records distributed for sale by the recipient
thereof); and (2), from time to time in connection with short-term or
other special sales programs of limited duration, such additional
Records as we in the exercise of our business judgment determine. We
shall distribute Phonograph Records in the form of New Records
embodying solely Masters in the United States at no-charge for sale by
the recipient thereof in accordance with our then-current general
policy applicable to Compact Discs at the time of our distribution of
those Records;
(ii) Royalties on Phonograph Records (whether or not intended
for sale by the recipient thereof) sold at a discount to distributors,
subdistributors, dealers, or others, whether or not affiliated with us
(except for Phonograph Records sold at less than fifty percent (50%) of
their regular wholesale price, for which no royalties are payable
hereunder) shall be reduced in the same proportion as the regular
wholesale price of those Phonograph Records is reduced on those sales;
(iii) For purposes of computing royalties, there shall be
deducted from the Royalty Base Price (or other applicable price, if
any, upon which royalties are calculated) of Phonograph Records
hereunder an amount equal to twenty percent (20%) thereof for all
Phonograph Records in the form of Conventional cassette tapes and
twenty-five percent (25%) thereof for Phonograph Records in all other
forms, whether now known or hereafter devised;
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(iv) Phonograph Records distributed by any of our affiliates
shall be deemed sold for the purposes of this Contract only if sold by
that affiliate to one of its independent third party customers and
final payment is received therefor by us in United States Dollars in
the United States;
(v) The royalty payable to you hereunder on a Phonograph
Record or other device embodying Masters together with other Master
Recordings shall be computed by multiplying the otherwise applicable
royalty rate by the "Reduction Factor." As used herein, the term
"Reduction Factor" shall mean, at our election, (A) a fraction, the
numerator of which shall be the number of Selections contained on the
Masters which are embodied on that Phonograph Record or other device
and the denominator of which shall be the total number of Selections
embodied on that Phonograph Record or other device or (B) a fraction,
the numerator of which shall be the playing time of the Selections
contained on the Masters which are embodied on that Phonograph Record
or other device and the denominator of which shall be the total playing
time of the Phonograph Record or other device in question. For any
Phonograph Record or other device for which a finite running or playing
time does not exist, the running or playing time of that Phonograph
Record or other device shall be deemed to be one hundred twenty (120)
minutes; and
(vi) The royalty payable to you hereunder and the Recording
Costs hereunder on a Master embodying your performances jointly with
any other artist or musician to whom we are obligated to pay a royalty
in respect of that Master shall be computed by multiplying the
otherwise applicable royalty rate and Recording Costs by a fraction,
the numerator of which shall be one (1) and the denominator of which
shall be the sum of one (1) and the total number of other artists or
musicians whose performances are embodied on that Master; and
(d) You hereby expressly authorize us and our licensees to collect and
receive on your behalf any royalties or other monies which may be payable in the
United States pursuant to the Audio Home Recording Act allocable to featured
performers and which is otherwise determined to be payable to you in respect of
your performances in Masters ("AHRA Monies"). We shall credit to your account
that portion of AHRA Monies received by us which is specifically allocable to
Masters and otherwise payable to you (less any portion thereof which may be
payable to any third party, including, without limitation, any producer of
Masters). You shall execute any further documentation which we reasonably deem
necessary or desirable to effectuate the foregoing provisions of this
subparagraph (d). Without limiting the foregoing, you shall not have the right
hereunder or otherwise to be paid or to have credited to your account any
portion of AHRA Monies received by us or otherwise received on our behalf
pursuant to the Audio Home Recording Act which is allocable to the owner of the
sound recording.
(e) The royalty payable to you hereunder includes all royalties due
you, Artist, the individual producers and all other persons in connection with
the sale of Records or other exploitation of Masters made hereunder.
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10. Royalty Payments and Accountings.
(a) We shall send to you statements for royalties payable
hereunder on or before the date ninety (90) days after the end of each of our
then-current semi-annual accounting periods (currently ending on June 30 and
December 31), together with payment of royalties, if any, earned by you
hereunder during the semiannual period for which the statement is rendered
(based on our receipts in the United States during the accounting period for
which the statement is rendered), less all advances and charges under this
Contract. Notwithstanding the foregoing, after the Term, no royalty statement
shall be required to be rendered for any semi-annual accounting period in which
less than Five Thousand Dollars ($5,000) in royalties are credited to your
account (whether by exploitation of Masters or liquidation of reserves) unless
(i) royalties are otherwise actually payable to you for that semi-annual
accounting period; or (ii) you notify us in writing of your request that we
render to you a statement for the semi-annual accounting period in which we
receive that request on the date otherwise required hereunder. We shall have the
right to retain, as a reserve against charges, credits, or returns, such portion
of payable royalties as shall be commercially reasonable and customary in the
industry in our best business judgment. You shall reimburse us on demand for any
overpayments, and we may also deduct the amount thereof from any monies payable
to you hereunder. Royalties paid by us on Phonograph Records subsequently
returned shall be deemed overpayments;
(b) No royalties shall be payable to you on sales of
Phonograph Records or other exploitations of Masters by any of our affiliates or
licensees until payment on those sales has been received by us in the United
States. Sales or other exploitations by an affiliate or licensee shall be deemed
to have occurred in the semiannual accounting period during which that affiliate
or licensee shall have rendered to us and we shall have received in the United
States accounting statements and payments for those sales or other exploitations
of Masters;
(c) (i) Royalties on exploitations of Masters outside of
the United States shall be computed in the national currency in which
our licensees or affiliates or other distributors pay us, shall be
credited to your royalty account hereunder at the same rate of
exchange at which our licensees or affiliates or other distributors
pay us, and shall be proportionately subject to any foreign
withholding or comparable taxes which may be imposed upon our
receipts. You shall not be entitled to any portion of a tax credit
which may be available to us or to any of our licensees or affiliates
in connection with any foreign taxes withheld from our receipts, from
the applicable price in computing the Royalty Base Price, or from any
other source; and
(ii) If we shall not receive payment in United States
dollars in the United States for any exploitations of Masters outside
of the United States, royalties on those exploitations shall not be
credited to your royalty account hereunder. If all advances and other
recoupable charges under this Contract are then currently recouped and
if we are able to do so, we shall accept payment for those
exploitations in foreign currency and shall deposit in a foreign bank
or other
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depository, at your expense, in that foreign currency, that portion
thereof, if any, as shall equal the royalties which would have been
payable to you hereunder on those exploitations had payment for those
exploitations been made to us in United States dollars in the United
States. The foregoing deposit shall not be reflected on your
accounting statements hereunder. Deposit as aforesaid shall fulfill
our royalty obligations hereunder as to those sales. If any law,
ruling or other governmental restriction limits the amount an
affiliate or licensee can remit to us, we may reduce your royalties
hereunder by an amount proportionate to the reduction in our
affiliate's or licensee's (as appropriate) remittance to us;
(d) You shall be deemed to have consented to all royalty
statements and all other accountings rendered or required to be rendered by us
hereunder and each royalty statement and other accounting shall be conclusive,
final, and binding, shall constitute an account stated, and shall not be
subject to any objection for any reason whatsoever, unless you give us notice
stating the specific basis for that objection within one (1) year after the
date rendered or required to be rendered. You may not maintain any action,
suit, or proceeding of any nature against us in respect of any royalty
statement or other accounting rendered or required to be rendered by us
hereunder (or in respect of the accounting period to which it relates or was
to relate) unless you commence that action, suit, or proceeding against us in
a court of competent jurisdiction within one (1) year after the date rendered
or required to be rendered. If you shall commence an action, suit, or
proceeding against us concerning royalty statements or other accountings
rendered or required to be rendered by us to you hereunder, the scope of
that action, suit or proceeding shall be limited to a determination of the
amount of royalties, if any, payable to you for the accounting periods in
question, and your sole remedy shall be the recovery of those royalties;
(e) We shall maintain books and records concerning the sale
of Phonograph Records hereunder. You shall have the right to designate an
independent certified public accountant on your behalf (who shall not be
compensated on a contingent fee basis), at your own expense, to examine those
books and records (but not any of our books or records relating to the
manufacture of Phonograph Records hereunder) solely for the purpose of
verifying the accuracy of royalty statements and other accountings rendered by
us hereunder, only during our normal business hours and only upon reasonable
written notice. Our books and records relating to a particular royalty
statement or other accounting may be examined only within one (1) year after
the date rendered or required to be rendered. We shall have no obligation to
permit you to examine our books or records relating to any particular royalty
statement or other accounting more than once. Prior to rendering a report to
you with respect to the examination of our books and records as aforesaid, the
independent certified public accountant engaged by you shall first review his
or her tentative written findings with a designated representative of our
finance department in order to remedy any factual errors and clarify any
issues that may have resulted from misunderstanding. You hereby acknowledge
that our books and records contain confidential trade information. Neither you
nor your independent certified public accountant or other representatives
shall communicate at any time to any others or use on behalf of any other
person, firm or corporation any facts or information obtained as a result of
any such examination of our books and records. Further, prior to the
commencement of
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any examination of our books and records in accordance with the provisions of
the subparagraph (e), you shall cause the independent certified public
accountant engaged by you to sign a letter in a form approved by us which
acknowledges his or her agreement (and the agreement of his or her firm) to be
bound by the foregoing. The rights hereinabove granted to you shall constitute
your sole and exclusive rights to examine our books and records;
(f) We shall have the right to deduct from any monies payable
to you and/or Artist hereunder any amounts paid by us to you and/or Artist or
to any person, firm or corporation representing you and/or Artist or incurred
by us on your and/or Artist's behalf or on behalf of any person, firm or
corporation representing you and/or Artist, if those monies are not otherwise
required to be paid or incurred by us hereunder (unless we expressly agree in
writing that the payment in question is non-deductible or is only recoupable
from royalties earned by you and/or Artist hereunder). Accordingly, all
amounts paid or incurred by us for the services of third parties to market and
promote sales of Phonograph Records embodying Masters shall be recoupable from
royalties earned by you and Artist hereunder; and
(g) We shall have the right to deduct from any monies payable
to you and/or Artist hereunder any amounts which are required to be deducted
from any of those monies under any statute, regulation, treaty or other law,
or under any union or guild agreement, and you and Artist shall promptly
execute and deliver to us any forms or other documents as may be required in
connection therewith. If we fail for any reason to deduct and instead pay any
of those monies required to be deducted from monies payable to you and/or
Artist hereunder, and if, as a result, we are required by any statute,
regulation, treaty or other law or union or guild agreement to pay to any
third party any amounts which were paid to you and/or Artist but which were
required to be deducted, then, without limiting any of our other rights or
remedies in that event, you shall pay to us, upon our demand, the amount of
those monies which were paid to you and/or Artist but which were required to
be deducted, or, at our election, we may deduct from any monies payable to you
and Artist hereunder the amount of those monies paid to you and/or Artist but
which were required to be deducted.
11. Musical Composition Licenses.
(a) You hereby grant to us and our designees the irrevocable
nonexclusive right to reproduce each Controlled Composition on Phonograph
Records and to distribute those Phonograph Records in the United States and
Canada on the following terms and conditions:
(i) Mechanical royalties shall be payable for
Controlled Compositions on Net Sales of Phonograph Records in the
United States and Canada at the following rates:
(A) On Phonograph Records sold in the
United States, the rate for each Controlled Composition
embodied thereon shall be the
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United States Controlled Composition Mechanical Rate. The term "United
States Controlled Composition Mechanical Rate" shall mean an amount
equal to seventy-five percent (75%) of the "United States Mechanical
Rate." The term "United States Mechanical Rate" shall mean an amount
equal to the minimum statutory royalty rate (without regard to playing
time) provided in the United States Copyright Act for the reproduction
of Musical Compositions as of the "Determination Date" (defined
below);
(B) On Phonograph Records sold in Canada,
the rate for each Controlled Composition embodied thereon
shall be the Canadian Controlled Composition Mechanical
Rate. The term "Canadian Controlled Composition Mechanical
Rate" shall mean an amount equal to seventy-five percent
(75%) of the Canadian Mechanical Rate. The term "Canadian
Mechanical Rate" shall mean an amount equal to the minimum
statutory royalty rate (without regard to playing time)
provided in the Canadian Copyright Act for the reproduction
of Musical Compositions as of the Determination Date. If no
such statutory royalty rate exists, then the term "Canadian
Mechanical Rate" shall mean the minimum, standard mechanical
royalty rate provided in mechanical licenses between record
companies and unrelated publishers in Canada which are
issued by C.M.R.R.A. (or any successor) as of the
Determination Date. If no such standard mechanical royalty
rate exists, however, then the term "Canadian Mechanical
Rate" shall mean the mechanical royalty rate which we may,
in good faith, negotiate at arm's-length with unrelated
publishers effective as of the Determination Date. In no
event, however, shall the number of Canadian pennies
constituting the Canadian Mechanical Rate exceed the number
of United States pennies constituting the United States
Mechanical Rate in effect as of the Determination Date; and
(C) The term "Determination Date" shall
mean the date of delivery to us of the first (1st) Master
embodying the Musical Composition in question or, if
earlier, the date on which that first (1st) Master was
required to be delivered to us hereunder;
(ii) Notwithstanding the foregoing: The mechanical
royalty rate on a Controlled Composition which is an arrangement of a
public domain work shall be that percentage of the United States
Controlled Composition Mechanical Rate or the Canadian Controlled
Composition Mechanical Rate, as applicable, that is equal to the
percentage of the arrangement of the Controlled Composition which is
original in the arrangement and therefore subject to copyright in
accordance with the rules and regulations of ASCAP and/or BMI and for
which ASCAP and/or BMI provides written documentation of that
percentage of the originality in and to that arrangement of a
Controlled Composition, the mechanical royalty rate for a Controlled
Composition recorded in an EP, Long-Play Single, Mid-Price Record,
Budget Record or Records sold through record clubs shall be
three-fourths (3/4) of the United States Controlled Composition
Mechanical Rate or the Canadian
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Controlled Composition Mechanical Rate, as applicable; if any
particular Record (including, without limitation, so-called "cassette
Singles") embodies more than one (1) of the same or different
recordings of the same Controlled Composition, then the United States
Controlled Composition Mechanical Rate or Canadian Controlled
Composition Mechanical Rate, as the case may be, shall be payable only
once on all reproductions of that Controlled Composition in that
Record, and no mechanical royalties shall be payable for the
reproduction of any Controlled Composition on a Phonograph Record
unless the timing of the Controlled Composition in question as
recorded in the Master embodied on that Phonograph Record exceeds one
(1) minute and thirty (30) seconds in length;
(b) The term "Outside Selection" shall mean each Selection
which is not a Controlled Composition. You acknowledge that as an element of
your delivery to us of a Master, you are required to cause the issuance to us
of licenses to reproduce mechanically each Outside Selection in all Phonograph
Records sold in the United States or Canada on the Required Terms. The term
"Required Terms" shall mean mechanical royalty rates and otherwise on terms
that do not exceed the mechanical royalty rates and that otherwise are no less
favorable to us and our designees than those provided in the standard
mechanical licenses issued by The Harry Fox Agency, Inc. or any successor for
Phonograph Records sold in the United States and by C.M.R.R.A. or any
successor for Phonograph Records sold in Canada, except (i) the royalty rate
for the mechanical reproduction of Outside Selections on Phonograph Records
sold in the United States or Canada must not exceed the United States
Mechanical Rate or the Canadian Mechanical Rate above, as applicable, and (ii)
no royalties shall be payable for the mechanical reproduction of Outside
Selections on Phonograph Records sold in the United States or Canada for which
no Record royalties are payable under paragraph 9 above or otherwise. If for
any reason you fail to cause the issuance to us of a license for the
mechanical reproduction of any Outside Selection as and when required
hereunder, we shall have the right, at our election and without limiting our
other rights or remedies in that event, to negotiate and execute licenses for
the mechanical reproduction of each such Outside Selection on Phonograph
Records distributed in the United States or Canada on terms and conditions
which are determined solely by us or our designees. Solely for purposes of
subparagraph (e) below, those licenses so procured by us shall be deemed to be
on terms no less favorable to us or our designees than the Required Terms.
Nothing contained in this subparagraph amends or modifies your obligation to
deliver to us and our designees licenses for the mechanical reproduction of
all Selections recorded in the Masters as a condition for the delivery to us
of Masters or waives the provisions of subparagraph 11(i) below;
(c) (i) Notwithstanding anything to the contrary contained
herein, for Net Sales in the United States, the maximum aggregate
mechanical royalty rate for all Selections, including Controlled
Compositions, contained on a Phonograph Record, regardless of the
number of Selections contained thereon, shall be the product of (A)
the United States Controlled Composition Mechanical Rate and (B) ten
(10) for an Album, five (5) for an EP, and two (2) for a Single and a
Long-Play Single, and for Net Sales in Canada, the maximum aggregate
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mechanical royalty rate for all Selections, including Controlled
Compositions, contained on a Phonograph Record, regardless of the
number of Selections contained thereon, shall be the product of (A)
the Canadian Controlled Composition Mechanical Rate and (B) ten (10)
for an Album, five (5) for an EP, and two (2) for a Single and a
Long-Play Single;
(ii) Notwithstanding the foregoing, if we release a
Multiple Album embodying solely Masters hereunder, then, solely with
respect to that Multiple Album, the maximum aggregate mechanical
royalty rate for Net Sales of that Multiple Album in the United States
or Canada shall be the otherwise applicable maximum set forth in
subparagraph 11(c)(i) above for Net Sales of Albums in the United
States or Canada, as applicable, multiplied by a fraction, the
numerator of which is the Royalty Base Price of that Multiple Album in
the United States or Canada, as applicable, and the denominator of
which is the highest Royalty Base Price of an Album which is not a
Multiple Album in the configuration or format in question released on
our top-line label in the United States or Canada, as applicable, as
of the date of our initial release through normal retail distribution
channels in the United States or Canada, as applicable, of that
Multiple Album; and
(iii) Notwithstanding anything to the contrary
contained herein, royalties for the mechanical reproduction of any
Selection in any Phonograph Record distributed in the United States or
Canada shall be payable only on Net Sales of that Phonograph Record in
question for which in a Record royalty is payable hereunder pursuant
to paragraph 9 above; and
(d) We shall account for and pay royalties for the mechanical
reproduction of Controlled Compositions in accordance with the provisions of
subparagraphs (a), (d), (e), and (g) of paragraph 10 above; and
(e) If for any reason we are required to pay royalties for
the mechanical reproduction of any particular Selection (including a
Controlled Composition) or for the mechanical reproduction of all Selections
that are mechanically reproduced in a particular Phonograph Record in excess
of the applicable amounts fixed in subparagraphs (a), (b) or (c) above, the
royalties payable by us for the mechanical reproduction of Controlled
Compositions on Phonograph Records hereunder shall be reduced by an amount
equal to such excess. If that excess is greater than the amount of royalties
payable for the mechanical reproduction of Controlled Compositions on the
Phonograph Record in question, then upon our demand, you and/or Artist shall
pay to us an amount equal to the amount by which those excess mechanical
royalties exceed the royalties payable for the mechanical reproduction of
Controlled Compositions. In addition to all of our other rights and remedies,
we may deduct the amount of that excess from any and all royalties or other
monies payable to you and/or Artist under this Contract;
(f) Upon our request, you shall cause the issuance to us and
our designees a license to reproduce all Selections mechanically on Phonograph
Records hereunder distributed outside the United States and Canada on terms no
less favorable to
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us and our designees than those generally applicable to Phonograph Record
manufacturers in each country in question, The obligation to account for and
pay royalties for the mechanical reproduction of Selections on sales of
Phonograph Records outside of the United States shall be that of our
affiliates and licensees;
(g) If the copyright in any Controlled Composition is owned
or controlled by a person, firm or corporation other than you or Artist, you
shall cause that person, firm or corporation to grant to us and our designees
the same rights as you and Artist are required to grant to us and our
designees pursuant to this paragraph 11;
(h) You and Artist hereby grant to us and our designees, at
no fee, royalty, or other cost to us or our designees, the irrevocable,
non-exclusive, worldwide right in perpetuity to reproduce and publicly perform
each Controlled Composition in Audio-Visual Recordings, to distribute
Audio-Visual Records embodying those Audio-Visual Recordings, and otherwise to
exploit in any manner and through any media those Audio-Visual Recordings. You
and Artist shall, upon our request, cause the issuance to us and our
designees, at no fee, royalty, or other cost to us or our designees, the
irrevocable, non-exclusive, worldwide right in perpetuity to reproduce and
publicly perform each Selection which is not a Controlled Composition in
Audio-Visual Recordings, to distribute Audio-Visual Records embodying those
Audio-Visual Recordings, and otherwise to exploit in any manner or media those
Audio-Visual Recordings. If we or our designees shall pay any such fee,
royalty, or other cost, then you and Artist shall, upon our demand, pay us the
amount thereof, and we may, in addition to all of our other rights and
remedies, deduct that amount from any monies payable by us hereunder,
including without limitation, from those royalties payable pursuant to
paragraph 9 above in respect of the exploitation of Audio-Visual Recordings in
the United States or Canada;
(i) Any assignment, license or other agreement made with
respect to Controlled Compositions shall be subject to the terms hereof; and
(j) You and Artist grant to us and our designees the
irrevocable right throughout the world in perpetuity to (A) print and
reproduce on the packaging of Phonograph Records, at our election, the title
and lyrics to each Controlled Composition embodied in a Master and (B)
digitally encode in a Master or transmit together with the transmission of the
Master the title and/or lyrics to each Controlled Composition embodied in a
Master, all without payment to you, Artist or any other person, firm or
corporation of any monies or other consideration in connection therewith. You
and Artist also shall cause to be granted to us and our designees the
irrevocable right throughout the world in perpetuity to (A) print and
reproduce on the packaging of Phonograph Records embodying Masters, at our
election, the title and lyrics to each Selection embodied in a Master that is
not a Controlled Composition and (B) digitally encode in a Master or transmit
together with the transmission of the Master the title and/or lyrics to each
Selection embodied in the Master which is not a Controlled Composition, all
without payment to you or any other person, firm or corporation of any monies
or other consideration in connection therewith. If we are required to pay any
monies to any person, firm or corporation for the printing, reproduction,
encoding, or transmission of the title or lyrics of any Selection recorded
in a
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Master as aforesaid, then you shall, upon our demand, pay to us an amount
equal to those monies paid by us in connection therewith and we may, in
addition to all of our other rights or remedies, deduct that amount from any
monies payable by us hereunder.
12. Audio-Visual Recordings.
(a) Upon our request, Artist shall appear for the making of
Audio-Visual Recordings embodying Artist's performances on the following
terms:
(i) We shall designate the Musical Compositions which
shall be embodied in the Audio-Visual Recordings, the producer and
director of the Audio-Visual Recordings, all other individuals
rendering services in connection with the production of the
Audio-Visual Recordings, the storyboard and script for the production
of the Audio-Visual Recordings, and the locations at and the dates on
which the Audio-Visual Recordings shall be produced (collectively
referred to as "Audio-Visual Production Elements");
(ii) We shall pay the Audio-Visual Production Costs
of the Audio-Visual Recordings in an amount not in excess of a budget
designated or approved by us in writing, which for the video in
connection with Artist's First Album under the Recording Commitment is
$75,000. "Audio-Visual Production Costs" shall mean and include all
minimum union scale payments made to Artist in connection with the
production of the Audio-Visual Recordings, all payments which are made
to any other individuals rendering services in connection with the
production of the Audio-Visual Recordings, all other payments which
are made pursuant to any applicable law or regulation or the
provisions of any collective bargaining agreement between us and any
union or guild (including, without limitation, payroll taxes and
payments to union pension and welfare funds), all amounts paid or
incurred 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 you and Artist)
rendering services in connection with the production of the
Audio-Visual Recordings, together with all other amounts paid or
incurred in connection with the production and delivery to us of the
Audio-Visual Recordings. One hundred percent (100%) of the
Audio-Visual Production Costs shall be recoupable from royalties
payable under this Contract on the reproduction or other exploitation
of all Audio-Visual Recordings and Audio-Visual Records. Fifty percent
(50%) of the aggregate Audio-Visual Production Costs of each
Audio-Visual Recording shall be recoupable from royalties payable
under this Contract on the reproduction or other exploitation of
Masters in Phonograph Records reproducing sound alone;
(iii) The Audio-Visual Recordings shall be produced
in accordance with the rules and regulations of all labor unions and
guilds having jurisdiction over the production thereof;
(iv) You and Artist shall cooperate with us and our
designees fully
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and to perform to the best of your and Artist's ability in
connection with the production of the Audio-Visual
Recordings; and
(v) If the Audio-Visual Production Costs
exceed the budget approved by us in writing, you shall be
solely responsible for and shall promptly pay that excess.
If, however, we pay any excess Audio-Visual Production Costs,
you shall pay to us, upon our demand, an amount equal to that
excess. If for any reason you or Artist delay the
commencement of or are not available for any scheduled
appearance by Artist relating to the production of the
Audio-Visual Recordings, you shall pay to us, upon our
demand, an amount equal to the expenses or charges paid or
incurred by us by reason thereof. Notwithstanding anything to
the contrary contained herein, without limiting our other
rights and remedies, we may deduct the foregoing amounts from
any monies payable by us hereunder;
(b) Our rights in the Audio-Visual Recordings and our rights
to use your and Artist's name and the name, likeness, and other identification
and biographical material concerning you and Artist are set forth in
paragraphs 6 and 7 hereof, wherein the terms "Master Recordings" and
"Phonograph Records" include Audio-Visual Recordings and Audio-Visual Records,
respectively; and
(c) We are under no obligation to produce Audio-Visual
Recordings hereunder. Notwithstanding the foregoing, we agree to produce one
(1) Audio-Visual Recording in connection with the First Album in fulfillment
of the Recording Commitment in the initial Contract Period, provided that
music videos remain a viable tool among major record companies in the music
industry for the marketing and promotion of Records of the same genre as
Artist's. Audio-Visual Recordings shall not apply in fulfillment of your
Recording Commitment. We shall have no obligation, except as expressly
otherwise provided in this paragraph 12, to pay to you or Artist any monies in
connection with the production of Audio-Visual Recordings.
13. Warranties. Representations and Covenants. You hereby warrant,
represent, covenant and agree as follows:
(a) You have the right and power to enter into this Contract,
to grant the rights granted by you to us hereunder, and to perform all of the
terms hereof. Without limiting the generality of the foregoing, no Musical
Composition, other Selection or any other material recorded hereunder shall be
subject to any re-recording or other restrictions;
(b) During the Term, Artist shall become and remain a member
in good standing of any labor union or guilds with which we may at any time
have an agreement lawfully requiring Artist's membership;
(c) All recording sessions for the Masters shall be 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;
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(d) None of the following will violate or infringe upon the
rights of any person, firm or corporation, including, without limitation,
contractual rights, copyrights, rights of publicity and rights of privacy: any
name or other identification used by you or Artist; any Controlled Compositions;
any other Selections; and any materials, ideas, or other properties furnished or
designated by you or Artist and embodied or contained in or used in connection
with the Masters or the packaging of or the advertising for the Phonograph
Records embodying the Masters
(e) All recordings embodying Artist's performances heretofore
have been released commercially in the United States on Phonograph Records;
(f) Neither you nor 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;
(g) Except as otherwise specifically provided herein, we shall
have no obligation hereunder or otherwise to pay any person, firm, or
corporation any amounts in connection with the exercise of any of our rights
hereunder, including, without limitation, our rights with respect to the
recording or exploitation of Master Recordings. You are solely responsible for
and will pay all sums due Artist, the individual producers of each Master
hereunder, and all other persons entitled to receive royalties or other payments
in connection with the exploitation of Masters hereunder; and
(h) Without limiting the generality of anything contained in
the foregoing, you and Artist shall neither authorize the production of, nor
shall you produce for or deliver to us, any Master for which the recording
method known as "sampling" shall have been utilized to record in that Master any
sound or material created, owned or controlled by any third party.
(i) There is in existence between you and Artist a valid and
enforceable written agreement (the "Artist Agreement") pursuant to which Artist
is required to perform exclusively for you during the term of this agreement and
that contains appropriate provisions to allow you to comply with your
obligations hereunder. You will not modify or amend the Artist Agreement nor
waive your rights thereunder in any manner that might impair the rights granted
to us hereunder. You will take all steps necessary and desirable to keep the
Artist Agreement in full force and effect during the term hereof Simultaneously
with the execution of this agreement, you will deliver to us an agreement
between us and Artist in the form of inducement letter attached hereto as
Exhibit "A"; you hereby give your consent and approval to the contents thereof
and said Exhibit "A" is hereby made a part hereof You will require full and
complete performance by the Artist of the Artist Agreement.
(j) "Artist" refers to the individual(s) named in Paragraph I
above as
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well as any individual who at any given time during the term hereof then records
with the above-named individuals (other than background vocalists and
instrumentalists). The substitution of, addition to, or subtraction from any of
the present members of Artist may be done only upon the prior written approval
of you and us, provided that any substituted or added individual must agree in
writing to be bound by all of the terms and conditions of this agreement. You
will promptly deliver to us documents executed by such substituted or added
member necessary or advisable in our judgment to confirm that the new member has
agreed to be so bound.
14. Recording Restrictions.
(a) You warrant and represent that you have the sole and
exclusive right to the services of Artist as required herein. During the Tenn,
neither you nor Artist shall enter into any agreement or make any commitment
which would interfere with your and Artist's performance of any of the terms
hereof. Further, during the Term, neither you nor Artist shall perform for or
render services in connection with the recording of any Master Recordings for
use or reproduction in Phonograph Records by any person, firm, or corporation
other than us. After the Term, you and Artist shall not perform prior to the
Restriction Date for any person, firm or corporation other than us, for the
purpose of making Phonograph Records or Master Recordings, any Selection
recorded hereunder or under any other agreement between you or Artist and us or
our affiliates. The term "Restriction Date" shall mean the later of (i) the date
five (5) years subsequent to the last date on which a Master Recording embodying
that Selection was delivered to us and (ii) the date two (2) years subsequent to
the date on which the Tenn ended. Your agreement with the individual producer of
each Master hereunder will restrict said producer from producing a Composition
produced by such individual hereunder on another Master for any person or
company other than us for at least two (2) years from the date of delivery to us
of such Master; and
(b) You and Artist shall not at any time manufacture,
distribute, or sell or authorize the manufacture, distribution, or sale by any
person, firm, or corporation other than us of Phonograph Records embodying (i)
any performance rendered by Artist during the Term or (ii) any performance
rendered by Artist after the Term of a Selection recorded hereunder if that
performance shall have been rendered prior to the Restriction Date applicable to
that Selection. Furthermore, Artist shall not record nor shall you or Artist
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 us of Phonograph Records embodying that performance.
Specifically, but without limiting the generality of the foregoing, if during
the Term Artist performs any Selection or if after the Term Artist performs any
Selection prior to the Restriction Date applicable thereto, you and Artist will
not 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 our request, you shall promptly
deliver to us a copy of the pertinent provisions of each such contract and you
shall cooperate fully and reasonably with us in
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any controversy which may arise or litigation which may be instituted relating
to our rights pursuant to this paragraph.
15. Unique Services. You expressly acknowledge that 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 of
any term hereof, we will be caused irreparable injury which cannot adequately be
compensated by money damages. Accordingly, we shall be entitled to injunctive
relief, in addition to any other rights or remedies which we may have, to
enforce the terms of this Contract.
16. Certain Remedies.
(a) We may, at our election, suspend the running of the Term
and our obligations hereunder upon written notice to you (i) if for any reason
whatsoever your voice or ability to perform as an instrumentalist shall become
materially impaired, (ii) if Artist shall refuse, neglect, fail, or be unable
to fulfill any of Artist's obligations hereunder, or (iii) if as a result of an
Act of God, accident, fire, labor controversy, riot, civil commotion, act of
public enemy, law, enactment, rule, order, or act of any government or
governmental instrumentality, failure of technical facilities, failure or delay
of transportation facilities, illness or incapacity of you, Artist, or others,
or other cause of a similar or dissimilar nature not reasonably within our
control, we are hampered in the recording, manufacture, distribution, or sale of
Phonograph Records or our normal business operations become commercially
impractical. A suspension shall be for the duration of any such event or
contingency, and, unless we notify you to the contrary in writing, the Contract
Period during which that event or contingency shall have commenced shall be
automatically extended by a number of days equal to the total number of days of
the suspension, or such fewer number of days of which we may advise you in
writing. If any period of suspension arising from events other than (i) the
impairment of Artist's voice or ability to perform as an instrumentalist, (ii)
your or Artist's refusal, neglect, failure, or inability to fulfill any of your
obligations hereunder, or (iii) any other event affecting a substantial portion
of the United States recording industry, shall exceed six (6) consecutive
months in duration, you may give to us notice at any time during the
continuation of that period of suspension after the date six (6) months after
its commencement, of your desire that we discontinue such period of suspension
and that the Term be terminated if we fail to do so ("Termination Request"). If
we shall fail to give to you notice of our discontinuance of that period of
suspension within ten (10) business days after our receipt of your Termination
Request, the Term shall expire and we shall have no obligations or liabilities
to you hereunder, except for our obligations with respect to Masters delivered
hereunder prior to that termination, if any. Notwithstanding the foregoing, a
suspension of the Tenn pursuant to this subparagraph 16(a) shall not suspend our
royalty accounting and payment obligations hereunder unless the event causing
that suspension materially affects our ability to make payments or render
statements. No suspension shall in any manner suspend or otherwise impair our
rights under this Contract;
(b) If Artist's voice or ability to perform as an
instrumentalist shall become impaired or if you or Artist shall refuse, neglect,
fail, or be unable to fulfill any of
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your obligations hereunder, including, without limitation, Artist's obligation
to record for and deliver to us Masters within the time periods set forth in
paragraph 3 above, we may, without limiting our other rights or remedies,
terminate the Term upon written notice to you, in which event we shall have no
obligations or liabilities to you under this Contract, except for our
obligations, if any, with respect to Masters recorded prior to that termination.
If we so terminate the Term, you shall pay us, on demand, an amount equal to any
unrecouped advances hereunder, other than any advances attributable to and paid
in respect of a Required Album theretofore delivered by you to us; and
(c) In addition to our other rights hereunder, we shall have
the right, at our election and for any reason, with or without cause, to
terminate the Term at any time by written notice to you. Additionally, we shall
have the right, at our election, with or without cause, to refuse to permit you
to fulfill your then-current Recording Commitment for any Contract Period
including, without limitation, by discontinuing recording sessions for any
Masters and ceasing the payment of Recording Costs for any Masters. If we refuse
to permit you to fulfill your minimum Recording Commitment for. any Contract
Period, other than as a result of an event or contingency referred to in
subparagraph 17(a) above, we shall have no obligations or liabilities to you in
connection therewith unless within forty five (45) days after our refusal you
shall notify us of your desire to fulfill your minimum Recording Commitment for
that Contract Period and within thirty (30) days after our receipt of that
notice we shall fail to advise you in writing that we shall permit you to
fulfill your minimum Recording Commitment for that Contract Period. If we shall
fail to so advise you in writing that we shall permit you to fulfill your
minimum Recording Commitment for that Contract Period, the Term shall expire as
of the end of that thirty (30) day period and we shall have no obligations or
liabilities to you whatsoever in connection with our fault to permit you to
fulfill your Recording Commitment for that Contract Period. We shall, however,
pay to you promptly after the expiration of that thirty (30) day period, as an
advance recoupable from royalties hereunder or under any other agreement between
you and us or our affiliates, an amount equal to the minimum union scale
payments which would have been required to have been paid to you for each
Required Album for that Contract Period that we did not permit you to record.
For the purposes of the foregoing, an Album shall be deemed to be comprised of
eight (8) Masters.
17. Producer Provisions.
(a) You shall cause any and all producers of the Masters to
execute a Producer Declaration in the form attached hereto as Exhibit B prior to
the commencement of recording sessions for any Masters hereunder. Without
limiting the generality of anything set forth in paragraph 4 above, no recording
sessions shall be commenced nor shall we have any obligation to pay to you any
advances for the Masters pursuant to paragraph 8 above unless and until you
shall have entered into a binding agreement with any and all producers of the
applicable Masters and we shall have received an executed Producer Declaration
from any and all producers of the applicable Masters,
(b) 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
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producers or directors of Audio-Visual Recordings or to any others rendering
services in connection with the recording of the Masters and the production of
Audio-Visual Recordings or otherwise entitled to compensation in respect of the
exploitation of Masters or Audio-Visual Recordings; and
(c) We may, but shall not be obligated to, enter into an
agreement with any producers of the Masters or any producer or director of any
Audio-Visual Recordings which provides for the payment by us, rather than you,
of royalties or other compensation payable to any such producer or director;
provided, however, that any such agreement shall contain standard terms and
conditions and we shall consult with you prior to our entering into any such
producer agreement, provided you are reasonably personally available therefor.
We shall consider in good faith your recommendations with respect to such
agreements, provided, however, that our decisions with respect thereto shall be
final and our failure to so consult with you in accordance with this
subparagraph 17(c) shall not constitute a breach of the Contract. We may deduct
any amounts payable by us to those producers or directors of Masters or
Audio-Visual Recordings from any monies payable by us hereunder. Furthermore,
for the purposes of the recoupment of any advances or charges under this
Contract, the royalty rates contained in paragraph 9 with respect to those
Masters and Audio-Visual Recordings shall be deemed reduced by the amount of the
applicable royalty rates with respect to Masters and Audio-Visual Recordings
payable by us to any such producers or directors. Any advances payable by us to
those producers or directors which are not recouped by us from royalties payable
to those producers or directors may be recouped by us from any royalties or
other sums payable by us hereunder.
(d) In the event of your dissolution or the liquidation of
your assets, or the filing by or against you of a petition for liquidation or
reorganization under Title II of the United States Code as now or hereafter in
effect or under any similar statute relating to insolvency, bankruptcy,
liquidation or reorganization, or in the event of the appointment of a trustee,
receiver or custodian for you or for any of your property, or in the event that
you make an assignment for the benefit of creditors or commit any act for or in
bankruptcy, or you become insolvent, or in the event you fail to fulfill any of
your obligations under this agreement for any other reason, then at any time
after the occurrence of any such event, in addition to any other remedies which
may be available, we will have the right, exercisable by notice to you, either
to (a) terminate the term of this agreement, or (b) to require Artist to render
Artist's personal services directly to us for the remaining balance of the term
of this agreement, including any extension thereof, for the purpose of
fulfilling your obligations hereunder, upon all the same terms and conditions as
are herein contained. In the event we exercise option (b) above, Artist will be
deemed substituted for you as a party to this agreement as of the date of our
option exercise, and, in respect of Masters subsequently delivered hereunder,
the royalties and any Advances payable hereunder will be those payable pursuant
to the Artist Agreement.
(e) If we elect to receive Artist's services directly under
the terms of the Inducement Letter pursuant to a claim by Artist that you are no
longer entitled to Artist's services, then our obligations to you under this
agreement will be automatically suspended until it is determined, through final,
non-appealable award judgment or arbitration) or
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written settlement agreement, whether you are entitled to Artist's recording
services as required by this agreement. Further, we will have access to your
books and records so that we may, at our election, account and make payments
directly to Artist in accordance with the Artist Agreement, which payments will
fully satisfy our obligations to make payments to you hereunder during such
suspension. If and when you are so determined to have been entitled to Artist's
services as required herein, then (a) such suspension will terminate, (b) we
will pay you any amounts withheld during the suspension, less any amounts paid
by us to Artist, to any producer of Masters or other Recordings and to any other
persons or companies who may be entitled to receive royalties or other sums in
respect of Masters or other Recordings, any and all of which will be deemed to
have been paid hereunder, and (c) any Masters and other Recordings recorded by
Artist during such suspension will be deemed to be Masters or other Recordings,
as applicable, recorded hereunder. In the event you are so determined not to
have been entitled to Artist's services as required hereunder, then you will be
deemed to be in material breach of this agreement, and, without limiting any of
our rights or remedies, we may terminate the term of this agreement by notice to
you at any time, in which event the term hereof will be deemed to have been
terminated as of the date the suspension commenced. In the event we so terminate
the term hereof, Recordings made directly for us under the terms of the
Inducement Letter will be and remain our sole and exclusive property, not
subject to this agreement insofar as you are concerned, and we will have no
obligation whatsoever to pay any monies to you with respect to such Recordings,
whether earned before or after the effective date of such termination. If Artist
breaches the Artist Agreement, you will immediately notify us in writing of the
details of such breach. If you do not enforce any of your rights under said
agreement, we may, without limitation of our rights or remedies, enforce such
rights in your name and/or our name.
18. Definitions.
(a) The term "Album" shall mean a twelve (12) inch
thirty-three and a third (33-1/3) rpm long-playing vinyl-disc Phonograph Record
of no fewer than forty-five (45) minutes in playing time or its cassette tape or
other equivalent or substantial equivalent in any form or configuration, and,
where the context requires, Masters sufficient to constitute a twelve (12) inch
thirty-three and a third (33-1/3) long-playing vinyl-disc Phonograph Record of
no fewer than forty-five (45) minutes in playing time or its tape or other
equivalent or substantial equivalent in any form or configuration. The maximum
playing time of an Album shall not exceed the maximum number of minutes capable
of being reproduced pursuant to the technological specifications of the format
or configuration concerned, which shall be designated by us in our reasonable
good faith discretion;
(b) The term "Audio-Visual Record" shall mean a Phonograph
Record embodying visual images;
(c) The term "Audio-Visual Recording" shall mean a Master
Recording embodying visual images;
(d) (i) The term "Budget Audio-Visual Record" shall mean an
Audio-
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Visual Record which bears a Royalty Base Price in the country in question which
is sixty-six and two-thirds (66-2/3%) percent or less of the Royalty Base Price
in that country of top-line Audio-Visual Records on which recordings of the
majority of our artists are initially released in that country;
(ii) The term "Budget Record" shall mean a Phonograph
Record which bears a Royalty Base Price in the country in question
which is sixty-six and two-thirds (66-2/3%) percent or less of the
Royalty Base Price in that country of top-line Phonograph Records on
which recordings of the majority of our artists are initially released
in that country;
(e) The term "Compact Disc" shall mean a Digital Record in any
configuration (e.g., Album, Single, EP) in disc form primarily reproducing sound
(but not together with visual images), the signals of which are read and
transmitted from that disc by means of laser,
(f) The term "Controlled Composition" shall mean a Musical
Composition or other Selection, written or composed by you, in whole or in part,
alone or in collaboration with others, by Artist, in whole or in part, alone or
in collaboration with others, or which is owned or controlled, in whole or in
part, directly or indirectly, by you, Artist, or any person, firm or corporation
in which you or Artist have a direct or an indirect interest
(g) The terms "Conventional Phonograph Record," "Conventional
cassette tapes," "Conventional vinyl discs" and "Conventional Album" shall refer
to black vinyl discs or analog tape cassettes of customary quality;
(h) The term "Digital Records" shall mean Records in any
configuration (e.g., Album, Single, EP), the signals of which are encoded and
decoded by digital technology, whether now known or hereafter devised, as
opposed to analog technology, and shall include, without limitation, Compact
Discs, digital audio tapes, mini discs and digital compact cassettes.
Notwithstanding the foregoing, the term "Digital Records" shall not mean a
Record exploited by means of direct transmission (whether digital or otherwise)
via satellite, cable or other direct transmission to the consumer over wire or
through the air, which shall constitute a New Record hereunder for all purposes;
(i) The term "delivery to us" or words of similar connotation
used in connection with Master Recordings or Masters shall mean delivery to our
Production Manager at our offices in Philadelphia, Pennsylvania of all of the
following: a two-track sequenced, equalized, fully-mixed and mastered digital
audio tape and/or U-matic 1630 tape in proper form for the production of the
parts necessary to manufacture Phonograph Records therefrom and all consents,
approvals, copy information, credits, mechanical licenses for all Selections
recorded in those Master Recordings or Masters and other material and documents
required by us to release Phonograph Records embodying those Master Recordings
or Masters and to manufacture album covers or other packaging therefor
(including, without limitation, Artwork). Our election to pay to you any monies
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which were otherwise required to have been paid upon or promptly after your
delivery to us of Masters or our election to release any Phonograph Record
derived from any Master shall not be deemed to be an acknowledgment by us that
delivery to us of that Master or Masters has been completed in accordance with
the provisions of this subparagraph (i). Further, in either event, we shall not
be deemed to have waived our right to require your complete and proper
performance thereafter of your obligation to deliver to us any Masters or any of
our remedies for your failure to do so in accordance with the provisions hereof,
(j) The term "EP" shall mean a twelve (12) inch thirty-three
and a third (33-1/3) rpm or forty-five (45) rpm vinyl-disc Phonograph Record, or
its cassette tape or other equivalent or substantial equivalent in any form or
configuration, embodying no fewer than four (4) Musical Compositions and no more
than seven (7) Musical Compositions;
(k) The term "Long-Play Single" shall mean a twelve (12) inch
thirty-three and a third (33-1/3) rpm or forty-five (45) rpm vinyl-disc
Phonograph Record, or its cassette tape equivalent or other equivalent or
substantial equivalent in any form or configuration, embodying one (1) or more
recordings of no more than three (3) different Musical Compositions,
(1) The term "Master Recording" shall mean every form of
recording (whether now known or unknown), embodying sound alone, or sound
accompanied by visual images, which may be used in the recording, production, or
manufacture of Phonograph Records;
(m) The term "Master" shall mean a Master Recording embodying
Artist's performances recorded during the Term;
(n) (i) The term "Mid-Price Audio-Visual Record" shall mean an
Audio-Visual Record bearing a Royalty Base Price in the country in question in
excess of sixty-six and two-thirds (66-2/3%) percent and less than eighty (80%)
percent of the Royalty Base Price in that country of top-line Audio-Visual
Records on which recordings of the majority of our artists are initially
released in that country;
(ii) The term "Mid-Price Record" shall mean a Phonograph
Record bearing a Royalty Base Price in the country in question in excess of
sixty-six and two-thirds (66-2/3%) percent and less than eighty (80%) percent of
the Royalty Base Price in that country of top-line Phonograph Records on which
recordings of the majority of our artists are initially released in that
country;
(o) The term "Multiple Album" shall mean a single package
containing two (2) or more Albums, or their cassette tape or other equivalent or
substantial equivalent in any form or configuration, which is sold as a single
unit, and, where the context requires, Master Recordings sufficient to
constitute a single package containing two (2) or more Albums, or their tape or
other equivalent or substantial equivalent in any form or configuration, which
is sold as a single unit;
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(p) The terms "Musical Composition" and "Composition" shall
mean a single musical composition and, for the purposes of computing mechanical
royalties hereunder, shall include a medley;
(q) (i) With respect to Masters other than Audio-Visual
Recordings, the term "Net Receipts" shall mean the flat-fee, if specifically
attributable solely to one (1) or more Masters, or the royalty, as the case may
be, received by us from a person, firm or corporation from the exploitation by
that person, firm or corporation of rights in those Masters, less all costs paid
or incurred by us in connection with the exploitation of those rights and the
collection of those monies, less all taxes and adjustments and less all
royalties or other sums payable by us to any person, firm or corporation in
connection with the exploitation of those rights, including, without limitation,
royalties for the mechanical reproduction of the Selections embodied in those
Masters, but excluding royalties or other sums payable to producers of those
Masters, which shall be borne solely by you; and
(ii) With respect to Audio-Visual Recordings, the term
"Net Receipts" shall mean an amount equal to the flat-fee, if
specifically attributable solely to one (1) or more Audio-Visual
Recordings, or the royalty, as the case may be, received by us from a
person, firm or corporation from the exploitation by that person, firm
or corporation of rights in those Audio-Visual Recordings, less twenty
percent (20%) of those monies as a distribution fee, less all costs
paid or incurred by us in connection with the exploitation of those
rights and the collection of those monies and less all taxes and
adjustments and less a royalties or other sums payable by us to any
person, firm or corporation in connection with the exploitation of
those rights, including, without limitation, royalties for the
mechanical reproduction of the Selections embodied in those
Audio-Visual Recordings, but excluding royalties or other sums payable
to producers of the Masters embodied in those Audio-Visual Recordings
and producers or directors of those Audio-Visual Recordings, which
shall be borne solely by you;
(r) The term "Net Sales" shall mean ninety-percent (90%) of
gross sales for which final payment has been received by us in United States
Dollars in the United States, after deducting from gross sales returns, credits,
and reserves against anticipated returns and credits;
(s) The term "Net Sales through Normal Retail Distribution
Channels" shall mean Net Sales of Phonograph Records hereunder through our
principal distributor in the country in question for resale through record or
other retail stores for which a Record royalty is payable hereunder after the
retention of reserves (and, without limiting the generality of the foregoing,
shall exclude sales or distributions referred to in paragraph 9(b) above);
(t) The term "New Record" shall mean a Phonograph Record in
any software medium in which recorded music is not in general commercial
distribution in the
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United States as of January 1, 1999, including, without limitation, the sale of
Phonograph Records (or other exploitation of Masters) through the telephone,
satellite, cable or other direct transmissions to the consumer over wire or
through the air (as distinguished from radio or television advertised sales of
Phonograph Records described in subparagraph 9(b)(i) above);
(u) The terms "Phonograph Record," "Record" or "Recording(s)"
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, other pre-recorded tapes, or any digital copy, including,
without limitation, so-called "temporary copy";
(v) The term "Royalty Base Price" shall mean the following
amounts for the following Phonograph Records:
(i) (A) With respect to Phonograph Records (other than
Audio-Visual Records) sold in the United States or Canada, the SRLP
except as set forth below; and
(B) With respect to royalties payable on Net Sales of
Phonograph Records in the United States or Canada for which the Royalty
Base Price is the SRLP, we shall have the fight, at any time, at our
election, to calculate royalties hereunder on the basis of our
principal distributor's price (before consideration of any discounts
resulting from the distribution of free goods), from time to time, to
its customers in the United States of Phonograph Records, in lieu of
the SRLP of those Phonograph Records, multiplied by an "uplift." As
used in the immediately-preceding sentence, the term "our principal
distributor's price" shall mean the lowest wholesale price paid by the
largest category of customers to our principal distributor in the
United States during the relevant semi-annual accounting period. If we
elect to do so, then we shall calculate that uplift" as a fraction, the
numerator of which is the SRLP of a Comparable Phonograph Record
immediately prior to our discontinuance of retail-based calculations
and the denominator of which is our principal distributor's price
(before consideration of any discounts resulting from the distribution
of free goods) to its customers in the United States of a Comparable
Phonograph Record immediately prior to our discontinuance of
retail-based calculations. The application of the foregoing provisions
of this subparagraph shall not result in a reduction in the amount of
royalties otherwise payable to you hereunder on a
configuration-by-configuration basis immediately prior to our
discontinuance of retail-based calculations. For purposes of this
subparagraph, the term "Comparable Phonograph Record" shall mean a
Phonograph Record of the same configuration, with the same packaging,
and in the same price category as the Phonograph Record in question;
and
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(ii) With respect to Phonograph Records (other than
Audio-Visual Records) sold outside 'of the United States and Canada:
(A) If an SRLP is established or utilized by our
licensee (whether or not affiliated with us) in a particular country in
accounting to us, then that particular SRLP established or utilized by
our licensees shall apply to Phonograph Records hereunder;
(B) If an SRLP is not established or utilized by our
licensee (whether or not affiliated with us) in a particular country in
accounting to us on sales of Phonograph Records, then, at our election,
(1) the price upon which mechanical royalties are generally computed
and paid by major record companies (including, without limitation, our
then-current principal distributor) in the country in question pursuant
to the then-current agreement between major record companies and the
mechanical reproduction rights society in that country or (2) an amount
computed by multiplying the lesser of (aa) that percentage utilized by
our affiliate or licensee in computing a retail related price or
constructed price on which royalties are paid to us and (bb) one
hundred twenty-six percent (126%), by the lowest of (aa) the
so-called "published price to dealers," (bb) the lowest wholesale price
paid to our or our affiliate's or licensee's principal distributor in
the country in question by the largest category of customers during the
relevant semiannual accounting period and (cc) the wholesale price
which our licensee (whether or not affiliated with us) in a particular
country uses in accounting to us for royalties.
(iii) With respect to Audio-Visual Records sold in
any country of the world, an amount equal to the monies actually
received by us in the United States (or credited to us in final
reduction of an advance previously received by us in the United
States) from the sale of those Audio-Visual Records (rather than their
actual SRLP, wholesale price, published price to dealers or any other
price), after deduction of a distribution fee of twenty percent (20%)
of those monies; and
(iv) There shall be deducted from the Royalty Base Price
an amount equal to any excise, sales, value added or comparable or
similar taxes which are included therein;
(w) The term "Selection" shall mean a Musical Composition,
poem, dramatic work, comedy routine, or other verbal expression;
(x) The term "Single" shall mean a seven (7) inch vinyl-disc
Phonograph Record or its tape or other equivalent or substantial equivalent in
any form or configuration; and
(y) Except as otherwise herein provided, the term "SRLP" shall
mean those suggested retail list prices established by us or our affiliates or
licensees from time to time for Phonograph Records in a particular configuration
which shall be determined from
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time to time with reference to the relevant wholesale price in a manner that
shall be applied consistently to a majority of our (or our licensees' or
affiliates') then-current recording artists. With respect to New Records that
are distributed by telephone, satellite, cable or other direct transmissions
over wire or through the air, the term "SRLP" shall mean either those suggested
retail list prices therefor, if any, established by us or our affiliates in
accordance with the terms of the preceding sentence or those retail list prices
charged to the ultimate consumer therefor, excluding any shipping and handling
charges in connection therewith.
19. Indemni1y. You hereby indemnify, save, and hold us harmless from
any and all damages, liabilities, costs, losses and expenses (including legal
costs and attorneys' fees) arising out of or connected with any claim, demand or
action by us or by a third party which is inconsistent with any of the
warranties, representations or covenants made by you in this Contract. You shall
reimburse us, on demand, for any payment made by us 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, we may
withhold, at our election, payment of any monies otherwise payable to you
hereunder or under any other agreement between you and us or our affiliates in
an amount which does not exceed your potential liability to us pursuant to this
paragraph.
20. Assigment. We shall have the right, at our election to assign this
Contract or any of our rights hereunder, in whole or in part, or to delegate any
of our obligations hereunder, in whole or in part, to any person, firm or
corporation. You shall not have the right to assign this Contract or any of your
rights or to delegate any of your obligations hereunder.
21. Notices. 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 I hereof or at such other address as you shall
designate in writing from time to time. All notices to be given to us hereunder
shall be addressed to us at the address set forth on page I hereof or at such
other address as we shall designate in writing from time to time. All notices
shall be in writing and shall either be served by personal delivery, certified
mail, return receipt requested, or facsimile transmission (with a copy sent
concurrently by certified mail, return receipt requested), all charges prepaid,
except that statements and payments may be sent by regular mail. Notices to us
must be sent to the attention of our Senior Vice President, Business & Legal
Affairs. Except as otherwise provided herein, notices shall be deemed given when
personally delivered, mailed as aforesaid, or transmitted by facsimile (with a
concurrent copy mailed as aforesaid), all charges prepaid, except that notices
of change of address shall be effective only after actual receipt. A copy of
each notice to us shall be sent simultaneously to Law Office of Brad A. Rubens,
LLC, 425 North 20th Street, Philadelphia, PA 19130, Attention: Brad Rubens.
22. Micellaneous.
(a) This Contract sets forth your and our entire understanding
relating to its subject matter. No modification, amendment, waiver, termination
or discharge of this Contract or of any its terms shall be binding upon either
of us unless confirmed by a
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document signed by you and by a duly authorized officer of ours. No waiver by
you or us of any term of this Contract or of any default hereunder shall affect
your or our 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) We shall not be deemed to be in breach of any of our
obligations hereunder unless and until you shall have given us specific written
notice by certified or registered mail, return receipt requested, describing in
detail the breach and we shall have failed to cure that breach within a
reasonable period of time; and
(c) Our payment obligations under this Contract are
conditioned upon your full and faithful performance of the terms hereof,
(d) Wherever your approval or consent is required hereunder,
that approval or consent shall not be unreasonably withheld. We may require you
to formally give or withhold approval or consent by giving you notice of our
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 us written
notice of your approval or disapproval or of your consent or non-consent within
five (5) days after our 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 us notice as aforesaid shall be deemed to be consent or
approval, as the case may be, with respect to the matter submitted;
(e) Nothing herein contained shall constitute a partnership,
joint venture, or fiduciary relationship between you or Artist and us. Except as
otherwise expressly provided herein, you and Artist are performing your
obligations hereunder as independent contractors. No party hereto shall hold
itself out contrary to the terms of this subparagraph 22(e) and neither you or
Artist nor we shall become liable for any representation, act or omission of
the other contrary to the provisions hereof,
(f) This Contract shall not be deemed to give any right or
remedy to any third party whatsoever unless that right or remedy is specifically
granted by us in writing to that third party;
(g) The provisions of any applicable collective bargaining
agreement between us and any labor union or guild which are required by the
terms of that agreement to be included in this Contract shall be deemed
incorporated herein as if those provisions were expressly set forth in this
Contract;
(h) In the event of any action, suit, or proceeding arising
from or based upon this Contract brought by either party hereto against the
other, the prevailing party shall be entitled to recover from the other its
attorneys' fees in connection therewith in addition to the costs of that action,
suit, or proceeding;
(i) 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;
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(j) THIS CONTRACT HAS BEEN ENTERED INTO IN THE COMMONWEALTH OF
PENNSYLVANIA AND ITS VALIDITY, CONSTRUCTION, INTERPRETATION AND LEGAL EFFECT
SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA APPLICABLE TO
CONTRACTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE COMMONWEALTH OF
PENNSYLVANIA (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES UNDER
PENNSYLVANIA LAW). THE VENUE FOR ANY ACTION, SUIT OR PROCEEDING ARISING FROM OR
BASED UPON THIS CONTRACT SHALL BE THE APPROPRIATE STATE AND FEDERAL COURTS
LOCATED IN THE COUNTY OF PHILADELPHIA IN THE COMMONWEALTH OF PENNSYLVANIA.
ACCORDINGLY, YOU AND WE AGREE THAT ANY ACTION, SUIT OR PROCEEDING ARISING FROM
OR BASED UPON THIS CONTRACT SHALL BE COMMENCED IN AND DETERMINED BY THOSE
APPROPRIATE STATES AND FEDERAL COURTS LOCATED IN THE COUNTY OF PHILADELPHIA 1N
THE COMMONWEALTH OF PENNSYLVANIA. IN CONNECTION WITH THE FOREGOING, YOU AND WE
EACH AGREE TO SUBMIT TO AND BE BOUND BY THE JURISDICTION OF THE APPROPRIATE
STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF PHILADELPHIA IN THE
COMMONWEALTH OF PENNSYLVANIA;
(k) This Contract shall not become effective until signed by
all parties hereto (including being countersigned by a duly authorized officer
of ours);
(1) The paragraph headings herein are solely for the purpose
of convenience and shall be disregarded completely in the interpretation of this
Contract or any of its terms;
(m) We may at any time during the Term obtain, at our cost,
insurance on you and/or Artist. We or our designees shall be the sole
beneficiary of that insurance and neither you, Artist, nor any person, firm or
corporation claiming rights through or from you or Artist shall have any rights
in that insurance. You and/or Artist shall submit to such physical examinations
and to complete and deliver such forms as we may reasonably require and
otherwise to cooperate with us fully for the purpose of enabling us to secure
that insurance;
(n) Upon our request, you and/or shall render your services at
such times and places as we may reasonably designate for the purpose of
assisting us in the marketing, advertising and promotion of Phonograph Records
hereunder. Among those services are engaging in interviews, participating in
press conferences, posing at photography sessions and appearing on television
and radio shows. Promptly after your submission to us of invoices or other
suitable documentation therefor, we shall pay to you or reimburse you for the
reasonable costs of travel and accommodations which are actually
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paid or incurred by you in connection with such services under this subparagraph
22(n), but you shall not pay or incur any costs or expenses in connection with
such services under this subparagraph 22(n) which are to be paid or reimbursed
by us unless you and we mutually agree in writing on the nature and extent of
those costs and expenses. If we pay or incur any costs in connection with such
services pursuant to this subparagraph 22(n) ("Promotional Services Costs"),
those Promotional Services Costs shall not be recoupable from royalties earned
by you and Artist hereunder. If, however, any third party pays to you or Artist
any fee or other consideration for or in connection with your services pursuant
to this subparagraph 22(n) (such as, but not limited to, a television appearance
fee) and we pay or incur any Promotional Services Costs in connection therewith,
then you shall pay to us all such fees and other consideration to the extent of
our Promotional Services Costs in connection therewith. If you fail for any
reason to pay to us those fees to the extent of our Promotional Services Costs,
then, at our election, the amount of all such fees received by you and/or Artist
from third parties in connection with rendering services pursuant to this
subparagraph 22(n) in an amount equal to our Promotional Services Costs shall be
deemed to be advances recoupable from any and all monies payable pursuant to
this Contract,
(o) Neither you nor Artist shall render any services to or
authorize or permit your or Artist's name or likeness or any biographical
material concerning you or Artist to be used in any manner by any person, firm
or corporation in the advertising, promoting or marketing of blank magnetic
recording tape, digital audio tape or any other product or device intended to be
sold, whether now known or hereafter developed, which may be used for the
fixation of sound alone or sound together with visual images;
(p) You acknowledge and agree that you have been represented
by independent legal counsel or have had the unrestricted opportunity to be
represented by independent legal counsel of your own choice for purposes of
advising you in connection with the negotiation and execution of this Contract.
Additionally, you acknowledge and agree that either you or your independent
legal counsel have had the opportunity to investigate and inquire about all of
the relevant facts and circumstances in connection with your entering into and
executing this Contract. If you have not been represented by independent legal
counsel of your own choice for purposes of advising you in connection with the
negotiation and execution of this Contract, you acknowledge and agree that your
failure to be represented by independent legal counsel in connection with your
negotiation and execution of this Contract was determined solely by you, without
any interference by us or any person, firm or corporation related to us;
(q) The provisions of the Immigration Reform and Control Act
("IRCA") are mandatory. You agree to complete the Immigration and Naturalization
Service Form 1-9 ("Employment Eligibility Verification Form") no later than
concurrently with your execution of this Contract. You expressly acknowledge and
agree that any and all payments to or on behalf of you under this Contract are
conditioned upon your delivery to us of a completed Employment Eligibility
Verification Form. This provision shall not in any way modify or alter the fact
that you are performing your obligations hereunder as an independent contractor,
except as otherwise expressly provided in this Contract;
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(r) Nothing contained in the Contract or otherwise shall be
deemed to authorize or permit you or Artist to pay or incur (and you and Artist
shall not pay or incur) any cost or expenses without our prior written consent,
which consent we may withhold in our sole discretion; and
(s) Unless otherwise specified herein or unless the context
otherwise clearly requires, the masculine gender used herein includes the
feminine and neuter genders, and the grammatically plural form of any term
defined in the singular form hereunder shall also be the plural form of such
defined term, and the grammatically singular form of any term defined in the
plural form hereunder shall also be the singular form of such defined term.
23. Sampling and Sampled Master. The following terms have the following
meanings: The term "Sampling" refers to the use and reproduction of preexisting
music material in a Master Recording intended to be a "Master"; the term "Other
Material" refers to the pre-existing musical material which is used or embodied
in a Master Recording intended to be a "Master"; and the term "Sampled Master"
refers to a Master Recording which is delivered to us as a "Master" subject to
this Contract embodying Other Material. You warrant, represent, covenant and
agree as follows: concurrently with your delivery to us of any Master Recording
as a "Master" subject to this Contract, you shall notify us in writing of any
Sampling of Other Material in that Master Recording, and you shall notify us in
writing of the names and addresses of the recording artist(s), recording
companies, songwriters and publishers who have any right, title or interest in
and to the Other Material embodied in that Master Recording intended to be
delivered to us as a "Master" subject to this Contract as a result of that
Sampling; no Sampled Master shall violate or infringe on the fights of any other
person, firm or corporation, including, without limitation, the copyrights owned
or controlled by any other person, firm or corporation; as between you, on the
one part, and us, on the other part, you shall be solely responsible for and
shall account for and pay to the persons, firms or corporations that own or
control Other Material all monies to which those other person, firms or
corporations are entitled to as a result of the Sampling of any Other Material
in Sampled Masters subject to this Contract; and, as between you and us, you
shall be solely responsible for obtaining all consents and licenses necessary or
desirable in connection with the use and reproduction and licensing the use and
reproduction of Other Material in Sampled Masters. No royalties, advances or
other money shall be earned by or payable to you hereunder in connection with
any Sampled Master and no Sampled Masters shall be deemed to be delivered to us
in fulfillment of your Recording Commitment unless and until we obtain
documentation reasonably satisfactory to us of the foregoing.
If the foregoing correctly reflects your agreement with us, please so
indicate by signing below.
Very truly yours,
ANTRA RECORDS GROUP, INC.
By: /s/ Joseph M. Maxxxx CEO
------------------------
AGREED AND ACCEPTED:
<PAGE>
LEGAL GRIND ENTERTAINMENT, INC.
By: /s/ xxxxxxxxxxxxxxxxxxxxxx
--------------------------
EIN:
-------------------------
40
<PAGE>
EXHIBIT "A"
Date: __________________, 199_
Antra Music Group, Inc.
1515 Locust Street
Philadelphia, PA 19102
Gentlemen:
Pursuant to an exclusive recording agreement between Legal Grind Entertainment,
Inc. ("Company") and Artist (the "Artist Agreement"), Company is entitled to
Artist's exclusive recording services. Artist has been advised that concurrently
herewith ANTRA is entering into an agreement with Company pursuant to which
Company agrees to furnish Artist's exclusive services to perform at recording
sessions for ANTRA (the "Furnishing Agreement"). Artist is familiar with each
provision of the Furnishing Agreement relating to Artist's obligations, assents
to the execution thereof, and agrees to be bound by all the restrictions and
other provisions therein relating to Artist.
In consideration of ANTRA's executing the Furnishing Agreement and as a further
inducement for ANTRA to do so (it being to Artist's benefit as a recording
artist that ANTRA execute the same), Artist hereby agrees as follows:
1. Company, at all times during the term of the Furnishing Agreement
(as it may be extended), will be authorized to furnish Artist's recording
services to ANTRA as provided in the Furnishing Agreement. Artist acknowledges
that ANTRA will have no obligations to make any payments to Artist in connection
with the services rendered by Artist or the fulfillment of Artist's other
obligations under the Furnishing Agreement, except as provided in the Furnishing
Agreement.
2. If, during the term of the Furnishing Agreement or any extensions
or renewals thereof, Company ceases to be entitled to Artist's recording
services in accordance with the terms of the Artist Agreement, or if Company
fails or refuses to furnish master recordings embodying Artist's performance to
ANTRA, Artist, at ANTRA's request, will do all such acts and things so as to
give ANTRA the same rights, privileges, and benefits as ANTRA would have had
under the Furnishing Agreement if Company had continued to be entitled to
Artist's recording services and if Company had continued to furnish master
recordings to ANTRA; such rights, privileges, and benefits will be enforceable
in ANTRA's behalf against Artist; and notwithstanding any breach by Company, all
the terms and conditions contained in the Artist Agreement will be effective as
if Company has assigned the Artist Agreement to ANTRA with Artist's consent. No
termination or modification of the Artist Agreement will operate to diminish
Artist's liability or obligations to ANTRA hereunder, and no breach of the
Artist Agreement by Company will be sufficient cause for Artist to fail to fully
perform for ANTRA pursuant to the Furnishing Agreement and this agreement.
<PAGE>
3. All of the terms, conditions and restrictions relating to Artist in
the Furnishing Agreement will be binding upon Artist (whether performing alone
or as part of a group) and regardless of the name(s) by which Artist may be
identified in Artist's artistic endeavors. Company's rights, obligations,
liabilities, prohibitions and restrictions contained in the Furnishing Agreement
are applicable hereto and incorporated herein by reference. The substitution of,
addition to, or subtraction from any of the present members of Artist may be
done only upon the prior written approval of ANTRA, provided that any
substituted or added individual will be deemed a party to this agreement and
must agree in writing to be bound by all of the terms and conditions of this
agreement. Artist will promptly deliver to ANTRA documents executed by that
substituted or added member necessary or advisable in ANTRA's judgment to
confirm that the new member has agreed to be so bound.
4. Artist hereby confirms and joins in the granting to ANTRA of the
rights specified in the Furnishing Agreement, including but not limited to, all
rights in and to the results and proceeds of Artist's recording services and the
right to use and publish Artist's names (legal, group and professional) and
likenesses and to write and publish, and permit others to write and publish,
articles concerning Artist for advertising and trade purposes in connection with
records, the promotion of Artist and general goodwill or institutional
advertising. Artist agrees that Artist will not, during the term of the
Furnishing Agreement (or any extension or renewal thereof), perform for anyone
other than ANTRA for the purpose of making Records, and Artist will not record
any Compositions which are recorded or acquired under the Furnishing Agreement
for anyone other than ANTRA except as provided in the Furnishing Agreement.
5. Artist acknowledges that ANTRA is the exclusive owner of all rights
of copyright in Masters and Records embodying the results and proceeds of
Artist's recording services made pursuant to the Furnishing Agreement or during
its term, including the exclusive right to copyright same as "sound recordings"
in the name of ANTRA, to renew and extend such copyrights (and all rights in and
thereto are hereby assigned to ANTRA), and to exercise all rights of the
copyright proprietor thereunder as provided in the Furnishing Agreement.
6. Artist is entitled to use the professional name ___________________
and to grant ANTRA the right to use said name as provided in the Furnishing
Agreement, and no other person or entity will have the right to use said name or
to permit it to be used in connection with the manufacture, distribution and
commercial exploitation of records.
7. ANTRA may, in its own name, institute any action or proceeding
against Artist to enforce its rights under the Artist Agreement, the Furnishing
Agreement and/or this agreement, and ANTRA will be entitled to equitable relief,
including injunctive relief, to enforce the provisions of said agreements.
8. Artist hereby acknowledges that the Artist Agreement provides that,
as of the end of each of the first seven Contract Years of the Artist Agreement
(or, if later, the first seven Contract Years of this agreement), each member of
Artist will have received Compensation (as defined below) of not less than the
following amounts:
First Contract Year: Nine Thousand Dollars ($9,000.00);
Second Contract Year: Twelve Thousand Dollars ($12,000.00);
<PAGE>
Third Contract Year: Fifteen Thousand Dollars ($15,000.00);
Fourth Contract Year: Fifteen Thousand Dollars ($15,000.00);
Fifth Contract Year: Fifteen Thousand Dollars ($15,000.00);
Sixth Contract Year. Fifteen Thousand Dollars ($15,000.00); and
Seventh (and any applicable succeeding) Contract Year: Fifteen
Thousand Dollars ($15,000.00).
Compensation paid in any Contract Year in excess of the minimums specified above
shall apply to reduce the Compensation otherwise required above to be paid in
any subsequent Contract Year. Artist warrants and represents that the term of
the Artist Agreement commenced on _______, 19__, and Artist has been paid all
minimum Compensation required above for that portion of the term of the Artist
Agreement prior to the commencement of the term hereof. In the event the
Compensation paid to any member of Artist is below the amount described above as
of thirty (30) days prior to the end of the applicable Contract Year, such
member of Artist will give ANTRA written notice containing specific reference to
this paragraph 8 and specifying such deficiency. Such notice may be given no
earlier than thirty (30) days nor later than fifteen (15) days prior to the
expiration of the Contract Year concerned. Promptly after its receipt of such
notice, during the term of the Furnishing Agreement, ANTRA will pay the actual
amount of any such deficiency on Company's behalf, which payment shall be a
pre-payment of any monies due under the Artist Agreement (other than Mechanical
Royalties). Any failure by ANTRA to make such payment will not constitute a
material breach of this agreement. As used in this paragraph 8 (a) Contract Year
means the annual period beginning on the first day of the term of the Artist
Agreement or this agreement, as applicable, and each subsequent annual period
during the continuance of the term hereof; and (b) Compensation means all monies
paid by ANTRA or Company to the member of Artist (including, but not limited to,
Advances and Record royalties, but not including Mechanical Royalties). Artist
hereby warrants and represents that all Compensation paid to Artist under the
Artist Agreement has been and will be divided in such a way so as to ensure
payment of the minimum Compensation, as required in this paragraph 8.
9. Artist agrees to indemnify, save and hold ANTRA harmless from and
against any liability, loss, damage, cost or expense (including reasonable
counsel fees) paid or incurred by ANTRA by reason of any breach by Artist of the
covenants, warranties, or representations contained herein or in the Artist
Agreement or Furnishing Agreement, and agree to reimburse ANTRA on demand for
any payment made by ANTRA after the date hereof with respect to any of the
foregoing.
10. This agreement is entered into in the Commonwealth of Pennsylvania
and the validity, interpretation and legal effect of this agreement will be
governed by the laws of such Commonwealth applicable to contracts entered into
and performed entirely within such Commonwealth. The Pennsylvania courts only
will have jurisdiction of any controversies regarding this agreement. Any
process or any action, suit or proceeding arising out of or relating to this
agreement may, among other
<PAGE>
methods, be served upon Artist by delivering it or mailing it in accordance with
the Furnishing Agreement.
Very truly yours,
/s/ Shanell D Graham )
- ------------------------------------- )
[_____________] )
)
)
/s/ Bobby Graham )
- ------------------------------------- )
[_____________] ) p/k/a "Sheeba Black"
) --------------
) (collectively and individually
) referred to in this Agreement as
/s/ Lolechia Graham ) "Artist")
- ------------------------------------- )
[_____________] )
)
)
- ------------------------------------- )
[_____________] )
Social Security No.____________ )
AGREED AND ACCEPTED:
ANTRA MUSIC GROUP, INC.
By: /s/ Joseph M. Marrone, CEO
-------------------------
LEGAL GRIND ENTERTAINMENT, INC.
By: /s/ xxxxxxxxxxxxxxxxx
-------------------------
An Authorized Signatory
<PAGE>
EXHIBIT B
PRODUCER DECLARATION
I, the undersigned, declare that I have read and understand
those relevant portions of the agreement between Legal Grind Entertainment, Inc.
("Company") and _________________________________________ (professionally known
as "__________________________" and referred to below as "Artist") dated
_____________________ ("Artist Agreement") that pertain to my record production
endeavors.
I hereby certify that I have produced or will have produced
certain master recordings embodying Artist's featured performance ("Masters")
pursuant to an agreement between Company and me ("Producer Agreement") which
provides for valuable consideration to be paid to me. As part of my material
obligations pursuant to the Producer Agreement and for the express and direct
benefit of Company and Antra Music Group ("Antra"), I hereby:
A. Grant to Company and Antra the perpetual right to use
and publish and to permit others to use and publish my
name, signature, approved likeness, and approved
biographical material concerning me for advertising and
trade purposes in connection with the sale and
exploitation of masters and records manufactured from
masters recorded pursuant to the Artist Agreement, or
to refrain therefrom.
B. Agree to look solely to Company for the payment of any
advances, fees and/or royalties, as the case may be,
and will not assert any claim in this regard against
Antra or attempt to prevent the manufacture, sale or
distribution of phonograph records manufactured from
Masters produced under the terms and conditions of the
Artist Agreement and the Producer Agreement. Any
payments that I may receive from Antra in connection
with the exploitation of Masters or my services
pursuant to Producer Agreement shall have been made
solely as an accommodation to Company and nothing
contained herein, in the Producer Agreement or in the
Artist Agreement shall constitute me a beneficiary of
or party to the Artist Agreement or any agreement
between Antra and Company or Artist.
C. Acknowledge and agree that each Master recorded under
the Producer Agreement embodying the results and
proceeds of my services (i) is prepared within the
scope of the Company's engagement of my personal
services and is a "work made for hire" or (ii) is
prepared as part of a long-playing phonograph record
(or its substantial equivalent) which constitutes a
work specially ordered by Company or Antra for use as a
contribution to a collective work and shall be
considered a "work made for hire." I further
<PAGE>
acknowledge that Antra is the exclusive owner of
copyright with respect to each such Master and any
"sound recording" or "phonorecord" or "copy"
manufactured therefrom (individually and collectively
called the "Work"), and that Antra has the right to
exercise all rights of the copyright proprietor with
respect thereto, including, but not limited to, all
exclusive right specified in 17 U.S.C. ss. 106 and the
exclusive right to register copyright in the name of
Antra.
D. Notwithstanding the provisions of paragraph C above, I
agree that to the extent, if any, that I may be deemed
an "author" of any Work, I hereby irrevocably transfer,
grant, convey and assign to Antra, exclusively,
perpetually and throughout the universe, all exclusive
right, title and interest in and to such Work,
including, but not limited to, all exclusive right of
the copyright owner as specified in 17 U.S.C. ss. 106.
I hereby grant to Antra a power of attorney,
irrevocable and coupled with an interest, to execute
for me and in my name, all documents and instruments
necessary or appropriate to effectuate the intents and
purposes of this paragraph D and to accomplish,
evidence and perfect the rights granted to Antra
pursuant to this paragraph D including but not limited
to documents to apply for and obtain all registration
of copyrights in and to any such Work, and documents to
assign such copyrights to Antra.
E. Agree that I shall not produce or co-produce, prior to
the date three (3) years after the Master shall have
been delivered to Antra in accordance with the
provisions of the Artist Agreement, any recording for
any person, firm or corporation other than Antra which
embodies, in whole or in part, any of the selections
recorded in the Masters.
/s/ XXXXXXXXXXXXX
------------------------
<PAGE>
CO-PUBLISHING AGREEMENT
AGREEMENT made as of the lst day of October, 1999, by and between
Antra Music Group, Inc. d/b/a Antraphil Music or such other publishing designee
as Antra Music Group, Inc. may designate, at 1515 Locust Street, Philadelphia PA
19102 (collectively the "Publisher", "we", "us", "our") and Jeffrey Brown p/k/a
"Crush," c/o James Elam, IV, Dilworth, Paxson LLP, 1735 Market St.,
Philadelphia, PA 19103-7595 ("Writer", "you", "your").
For good and valuable consideration, the receipt and sufficiency of
which is acknowledged by the parties, the parties, intending to be legally
bound, hereby agree as follows:
1. TERM
(a) The "Recording Agreement" is defined as the exclusive artist
recording agreement dated as of October 1, 1999, as same may be amended from
time to time, between Antra Music Group, Inc. ("Antra") and Jeffrey Brown p/k/a
"Crush" ("Artist").
(b) The term of this Agreement (the "Term") shall commence on the date
hereof and shall continue (subject to the remaining provisions of this paragraph
1) for a first contract period (the "Initial Period") ending ninety (90) days
after delivery (as defined in the Recording Agreement) of all materials required
to be delivered with respect to the Recording Commitment for the First Renewal
Period under the Recording Agreement.
(c) Writer hereby grants Publisher seven (7) separate, irrevocable and
exclusive options to extend the Term for additional Contract Periods (each of
which additional Contract Periods may sometimes herein be referred to as "Option
Period(s)") on the same terms and conditions applicable to the Initial Period.
Each such option shall be deemed automatically exercised if Antra exercises the
option for the next succeeding Album of the Recording Commitment under the
Recording Agreement, unless Publisher notifies Writer in writing that Publisher
has elected not to exercise an option hereunder, which notice shall be sent on
or before ninety (90) days following the delivery (as defined in the Recording
Agreement) of all materials required to be delivered in connection with the next
succeeding Album of the Recording Commitment under the Recording Agreement (by
way of illustration but not by way of limitation, Publisher shall have the right
to decline to exercise its option to extend the Term for a second Option Period
hereunder on or before ninety (90) days after delivery of the Recording
Commitment for the Second Renewal Period under the Recording Agreement); if
Publisher exercises an option hereunder, the Term shall be deemed automatically
extended until ninety (90) days after
1
<PAGE>
delivery of all materials required to be delivered in connection with the next
succeeding Album of the Recording Commitment under the Recording Agreement.
Notwithstanding anything contained herein, the Term of this Co-Publishing
Agreement shall be coterminous with the Term of the Recording Agreement.
2. GRANT OF RIGHTS
(a) Subject to Publisher's exclusive administration rights and the
other rights herein granted to Publisher, Writer hereby irrevocably assigns,
conveys and sets over to Publisher, an undivided fifty percent (50%) interest in
the right, title and interest in all Compositions, including without limitation,
the copyrights and all renewals and extensions of such copyrights, all claims
and causes of action related to any Compositions accrued or accruing at any
time, the right to secure copyright and renewal rights therein and thereto, and
all other rights in the Compositions throughout the Universe (the "Territory"),
in perpetuity. The Compositions shall be registered for copyright by Publisher
in the names of Publisher and Writer in the Office of the Register of Copyrights
of the United States of America. The Compositions subject to this agreement are
(i) all musical compositions created by Writer, alone or in collaboration with
others, during the Term hereof; and (ii) all musical compositions created by
Writer, alone or in collaboration with others, prior to the commencement of the
Term hereof which are not subject to an existing songwriting or publishing
agreement (individually and collectively "Compositions").
(b) Without limiting the generality of paragraph 2 (a) above, Publisher
shall have the sole and exclusive rights throughout the Territory for the full
term of the copyright and all renewals and extensions thereof with respect to
each of the Compositions:
(i) to print, publish and sell printed copies of the
Compositions in any and all parts of the Territory;
(ii) to grant non-exclusive licenses to manufacture parts
for mechanical and electrical reproduction including phonographic records and
transcriptions; and to collect all royalties and fees payable by reason
thereof;
(iii) to grant the rights of public performance of the
Compositions, including broadcasting and television, and to license such
rights throughout the World; and to collect all royalties and fees payable by
reason thereof including any and all performance monies or royalties payable
to Publisher in respect of the Compositions by the American Society of
Composers, Authors and Publishers, Broadcast Music, Inc. or any other
performing rights organization, provided, however, that Writer shall be
entitled to
2
<PAGE>
collect the so-called Writer's share of such performance income from such
performing rights organization(s) which pay such share directly to Writer;
(iv) to grant licenses for synchronization, recording,
reproduction and use of the Compositions in and with motion pictures, television
films and commercial advertisements; to make copies of the recordings thereof;
and to import, distribute and exploit such copies into all countries of the
world;
(v) to collect any and all royalties, fees and other monies
earned with respect to the Compositions (including, without limitation, any
royalties, fees or other monies earned prior to the date hereof but not
collected as of the date hereof);
(vi) to grant to third parties all rights granted hereunder to
publisher;
(vii) to make any and all arrangements and adaptations of the
Compositions of any kind or nature, to produce any new lyric thereof or a
translation of the original lyrics thereof or of any new lyric thereof, to
change the title thereof, and to do every other act and thing in respect of the
Compositions to make the same suitable and proper for publication in the
Territory (and to publish, use and exploit the Compositions with or without any
such arrangement, adaptation, new lyric or translation thereof in the
Territory), which new matter shall be jointly owned by Writer and Publisher in
accordance with the provisions of this Agreement; and
(viii) to otherwise administer and grant rights in, to and
under the Compositions and the copyrights therein.
(c) Writer hereby authorizes and appoints Publisher as Writer's
attorney-in-fact, irrevocably, to secure and renew or extend, for Publisher's
benefit, the copyright in the Compositions and to execute in Writer's name any
and all documents and instruments necessary or desirable to accomplish the
foregoing or to evidence Publisher's and Writer's ownership of such copyrights
(including the Exhibits attached to this Agreement), such power being coupled
with an interest is irrevocable.
(d) During the Term hereof, any person with whom Writer may wish to
collaborate as author, composer, arranger or adaptor of any compositions or
related work shall agree in writing prior to the commencement of such
collaboration that such person will be bound by the terms and conditions hereof
respecting Writer with respect to all the results and proceeds of the
collaborative effort. Without limiting the generality of the foregoing,
Publisher shall be the publisher of such collaborative work(s), subject to the
terms and conditions hereof.
3
<PAGE>
3. NAME AND LIKENESS
Publisher shall have the irrevocable and perpetual right to use,
reproduce, print, publish and disseminate (and to allow others to do so) the
name and likeness of Writer, and biographical material pertaining to Writer and
any other writer(s) for the purposes of trade in exploiting the Compositions,
and in advertisements for Publisher.
4. ADVANCES
With respect to the Compositions embodied on the first Album of the
Recording Obligation pursuant to the Recording Agreement, Publisher shall pay to
Writer an advance of Ten Thousand Dollars ($10,000) in accordance with the
following schedule: $3,500 which Writer acknowledges having received already
(which payment, although made prior to the date hereof, shall be deemed to have
been made in connection with the first Album of the Recording Obligation),
$2,500 payable upon full execution of this Agreement and the Recording
Agreement, $2,500 on or before thirty (30) days after the full execution of this
Agreement and the Recording Agreement, and $1,500 on or before sixty (60) days
after the full execution of this Agreement and the Recording Agreement, all of
which shall be applied against and recouped from all sums payable by Publisher
to Writer pursuant to Article 5 below.
5. ROYALTIES
On condition that Writer is not now or hereafter during the Term in
material breach of the terms and conditions of this Agreement, Publisher agrees
to pay to Writer the royalties and fees set forth below, of all net amounts
actually received by Publisher in the United States in United States Dollars in
respect of its exploitation of the Compositions:
(a) Public Performance Income: Fifty percent (50%) of Publisher's Net
Income derived from publisher's share of public performance income collected by
Publisher with respect to the performance, broadcast or televising of the
Compositions. Publisher and its sub-publishers or licensees shall collect the
full publisher's share of performance fees arising from the performance,
broadcast or televising of the Compositions. It is understood and agreed that
Writer will receive his/her/their respective share of nondramatic public
performance income directly from his/her/their respective performing rights
societies. If Publisher licenses any public performance use directly, Publisher
shall pay Writer seventy-five percent (75%) of Publisher's Net Income derived
from those licenses.
4
<PAGE>
(b) Mechanical Income: Seventy-Five percent (75%) of Publisher's Net
Income derived from the licensing, sale or other disposition of mechanical,
electrical or electronic reproduction rights in such Compositions; provided,
however that such amount shall be Fifty percent (50%) in respect of "cover"
recordings of the Compositions.
(c) Synchronization Income: Fifty percent (50%) of Publisher's Net
Income derived from the exploitation of the Compositions used for sound
synchronization in motion pictures, television sound tracks and commercials
(including, without limitation, radio or television) or other audiovisual works.
(d) Other Income: Seventy-Five percent (75%) of Publisher's Net Income
derived from the licensing of any other rights in the Compositions not specified
in this paragraph 5 (other than sums paid to Publisher as a result of litigation
or settlement of claims of infringement or other recovery made by Publisher
against an infringer, which shall be divided equally between Publisher and
Writer after the costs and expenses (including legal fees) have been recouped
out of such recovery.
(e) "Publisher's Net Income" shall mean all monies actually earned and
received by Publisher in the United States from the exploitation of the
Compositions throughout the Territory, less an administration fee equal to ten
percent (10%) of all such monies, and less all reasonable and actual costs and
expenses attributable to the Compositions and exploitation thereof including,
without limitation, any costs actually advanced or incurred by Publisher in
connection with the administration and exploitation of the Compositions
including, without limitation, all costs of copyrighting the Compositions; fees
of a trustee or collecting agent for the licensing of recording or other rights
in the Compositions; the costs of creation and exploitation of the new material
described in paragraph 2 (b) (vii) above, and all costs and expenses incurred in
connection with the exploitation and protection of Publisher's rights hereunder
including, without limitation legal fees and accounting fees; the costs of any
phonograph records or tapes of the Compositions distributed for promotional
purposes and the out-of-pocket costs of such distribution; the costs of
printing, arranging, and transcribing lead sheets for the Compositions, and
advertising and promoting the Compositions, but not including any expenses
related to Publisher's general overhead.
(f) Any direct or indirect payments to Writer with respect to the
Compositions (other than the songwriter's share of nondramatic public
performance income) shall be immediately reported and turned over to Publisher
for accounting under paragraph 6.
5
<PAGE>
6. ACCOUNTING
(a) Publisher shall account to Writer within ninety (90) days following
the end of each semi-annual period ending June 30th and December 31st, and all
monies shown to be due under this Agreement shall be paid by Publisher to Writer
in United States Dollars at the applicable rate of exchange at which Publisher
is paid, upon the rendition of the respective semi-annual statements. Royalties
shall not be due and payable until monies have actually been received by
Publisher in the United States in United States Dollars. Publisher agrees that
Writer shall have the right, upon reasonable notice and during normal business
hours not more than once a year, and not more than once with respect to any
accounting statement, to examine or have its duly authorized representative or
accountant examine Publisher's books and records insofar as they pertain to the
computation of royalties payable to Writer hereunder in respect of the
Compositions. All statements hereunder shall be deemed final and not subject to
objection unless specific objection stating the basis thereof is made by written
notice to Publisher within two (2) years from the date the statement is
rendered, and suit is commenced within one (1) year thereafter. For the purpose
of computing the time periods set forth in this paragraph 6 (a), each accounting
statement hereunder shall be deemed conclusively to have been rendered to Writer
on the last date prescribed in this paragraph 6 (a) unless Writer has notified
Publisher otherwise in writing within thirty (30) days after such date.
(b) Writer hereby authorizes and directs Publisher to withhold from any
monies due Writer from Publisher any part thereof required by any governmental
authority to be withheld and to pay such monies to such authority.
7. ASSIGNMENT
Publisher may sell, transfer, license, sublicense or assign this
Agreement or any of its rights hereunder to any third party.
8. WARRANTIES AND REPRESENTATIONS
(a) With the exception of so-called "samples" (as such term is commonly
understood in the music industry) which have been made known to Publisher and
which have been legally cleared and licensed at Writer's sole cost and expense
(in the event any assignment of music publishing ownership, income participation
or administration rights in or to a Composition, or any other terms affecting
the rights granted hereunder, shall become necessary to obtain such licensing
clearances, Publisher must approve the terms of any such agreement), but fully
subject to the terms of Subparagraph 8 (a) (i) below, Writer warrants and
represents that each of the Compositions are and/or will be original and will
not infringe upon
6
<PAGE>
any rights of any person, firm or corporation, the creative contributions of
Writer to the Compositions are and will be new and original, and no such
creative contributions are or will be an imitation or copy of any other musical
composition, or do or will violate or infringe upon any common law, statutory or
other rights of any party. Writer further warrants and represents that Writer
has the full right to enter into this Agreement and grant to Publisher all of
the rights granted herein free and clear of any and all claims, rights and
Commitments whatsoever.
(i) notwithstanding anything contained herein, any portion of
music publishing ownership, income participation or
administration required to be assigned or conveyed to clear
the usage of a sample or to settle a claim in connection with
a sample shall be deducted only from the ownership or income
participation interest otherwise possessed by Writer
hereunder.
(b) Publisher shall not be required to make any payments of any nature
for, or in connection with, the acquisition, exercise or exploitation of rights
by Publisher pursuant to this agreement except as specifically provided in this
agreement;
(c) No Materials, as herein defined, or any use thereof, will violate
any law or infringe upon or violate the rights of any Person. "Materials," as
used in this paragraph, means: (1) all Compositions, (2) the name used by Writer
or any writer(s) of the Compositions, and (3) all other musical, dramatic,
artistic and literary materials, ideas, and other intellectual properties,
furnished or selected by the Writer, and contained in or used in connection with
any Compositions hereunder or the advertising, publicizing or other exploitation
thereof; and
(d) Writer agrees to and does hereby indemnify, save and hold Publisher
harmless from and against any and all loss and damage (including legal fees)
arising out of or in connection with any breach or alleged breach of this
Agreement or any claim which is inconsistent with any of the warranties or
representations made by Writer in this Agreement. Writer agrees to reimburse
Publisher on demand for any payment made or incurred by Publisher with respect
to any liability or claim to which the foregoing indemnity applies. Pending the
determination of any claim involving such alleged breach or failure, Publisher
may withhold sums due you hereunder in an amount reasonably consistent with the
amount of such claim.
9. UNIQUE SERVICES
It is specifically understood and agreed that the services of Writer to
be rendered under this Agreement in writing and composing are unique and
extraordinary and cannot be replaced, and that in
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the event of violation by Writer of any of the terms or conditions hereof,
Publisher and all other parties in interest shall be entitled to injunctive and
other equitable relief in addition to all other rights and remedies.
10. INDEPENDENT CONTRACTOR
Writer represent(s) and warrant(s) that all of his/her/their services
shall be rendered under this Agreement in the capacity of an independent
contractor and not as an employee or joint venturer of Publisher. Without
limitation, Writer shall make all appropriate withholdings and pay all estimated
and other taxes and contributions of any sort or nature which may be required as
a result of or based upon any compensation payable to Writer hereunder. Writer
acknowledges that the foregoing warranty and representation will be relied upon
by Publisher for the purpose of determining whether or not it is necessary to
make withholdings for U.S. Federal Taxes and other applicable taxes and
Commitments from monies being paid to or for the account of Writer hereunder.
11. JURISDICTION
It is the express intent of the parties that this Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania, with the full force
and effect as though this Agreement had been executed in and fully performed in
said Commonwealth of Pennsylvania. In the event of any dispute hereunder, the
parties hereto expressly agree that the State Courts or the Federal Court
located in the County of Philadelphia shall have full jurisdiction over the
parties hereto, and the parties hereby bind themselves over fully and completely
to the jurisdiction of said courts. In the event that process must be served in
connection with any such dispute, the parties agree that such process may be
served by personal delivery within or without the Commonwealth of Pennsylvania
or by registered mail to the parties at their respective addresses set forth
herein.
12. NOTICES
All notices required to be given to Publisher shall be sent to
Publisher at its address first mentioned herein, and all royalties, royalty
statements and payments and any and all notices to Writer shall be sent to
Writer at his/her/their address first mentioned herein or such other address as
each party respectively may hereafter designate by notice in writing to the
other. All notices sent under this agreement shall be in writing and, except for
royalty statements shall be sent by registered or certified mail, return receipt
requested and the day of mailing of any such notice shall be deemed the date of
the giving thereof (except notices of change of address, the date of which shall
be the date of receipt
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by the receiving party). Writer shall send copies of all notices and
correspondence to Publisher to Law office of Brad A. Rubens, LLC, 425 North
20th Street, Philadelphia, PA 19130.
13. ENTIRE AGREEMENT
This agreement sets forth the entire agreement of the parties with
respect to the subject matter hereof, and no modification, amendment, waiver,
termination or discharge of this agreement shall be binding upon any party
unless confirmed by written instrument signed by the party against whom
enforcement is sought.
14. CURE
No breach of this Agreement on the part of Publisher shall be deemed
material, unless Writer shall have given Publisher notice of such breach and
Publisher shall fail to cure such breach within sixty (60) days after receipt of
such notice if such breach is reasonably capable of being fully cured within
such sixty (60) day period; or if such breach is not reasonably capable of being
fully cured within such sixty (60) day period, if Publisher shall fail to
commence to cure such breach within such sixty (60) day period and/or fail
thereafter to proceed with reasonable diligence to complete the curing of such
breach.
15. MISCELLANEOUS
(a) All copyrights and renewals and extensions thereof and all other
rights vested in Publisher during the Term hereof shall survive the termination
of this Agreement to the fullest extent permitted under the United States
Copyright Act of 1976.
(b) The title or headings of provisions herein are used for convenience
only, and do not constitute a part of this Agreement and are not to be used in
the construction hereof.
(c) If any part of this Agreement shall be determined to be invalid or
unenforceable by a court of competent jurisdiction or by any other legally
constituted body having jurisdiction to make such determination, the remainder
of this Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written;
ANTRA MUSIC GROUP, INC.("Publisher") ACCEPTED AND AGREED TO:
D/B/A ANTRAPHIL MUSIC ("Writer")
By:_________________________ By:/s/ Jeffrey Brown
-----------------------
Jeffrey Brown
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EXHIBIT "A"
ASSIGNMENT OF COPYRIGHT
For and in consideration of the sum of One Dollar ($1.00) and other
good and valuable consideration, the receipt of which is hereby acknowledged,
the undersigned hereby irrevocably sells, assigns, transfers, sets over and
conveys to Antra Music Group, Inc: d/b/a Antraphil Music, its successors and
assigns (subject to the terms of that certain agreement between the undersigned
and Antra Music Group, Inc. dated as of the lst day of October, 1999), fifty
percent (50%) of the undersigned's undivided right, title and interest in the
entire worldwide copyright and any and all other rights, including any renewals,
extensions and reversions of copyright and any and all other rights in and to
the musical compositions set forth on Schedule 1 attached hereto and made a part
hereof, including the title, music and lyrics thereof and all arrangements
thereof and the right to arrange, adapt and create derivative works from such
musical compositions, together with all copyrights and proprietary rights
therein and in any and all versions of said musical compositions, and any
renewals, extensions and reversions thereof (whether presently available or
subsequently available as the result of intervening legislation) in the United
States of America and elsewhere throughout the world, and further including any
and all causes of action for infringement of the same, past, present and future,
and all proceeds from the foregoing accrued and paid hereafter accruing.
IN WITNESS THEREOF, the undersigned has caused this transfer
of copyright to be executed this 1st day of October, 1999.
/s/ Jeffrey Brown
---------------------
Jeffrey Brown
STATE OF PENNSYLVANIA )
) ss:
COUNTY 0F PHILADELPHIA )
On this 1st day of October, 1999, before me personally came Jeffrey Brown, and
to me known, and known to me to be the person named in and who executed the
foregoing agreement, and who has acknowledged to me that he has executed same.
/s/ Rose Marie Walsh
-----------------------
Notary Public
EXHIBIT "A"
Rose Marie Walsh
Commissioner of Deeds
Commonwealth of Pennsylvania
My Commission Expires Dec. 8, 2000
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EXHIBIT "B"
October 1, 1999
Broadcast Music, Inc.
320 West 57th Street
New York, NY 10019
Gentlemen:
Please be advised that the undersigned has entered into an agreement
with Antra Music Group, Inc. d/b/a Antraphil Music ("Antraphil"), of 1515
Locust Street, Philadelphia, PA 19102 pursuant to which Antraphil shall have
the sole and exclusive right to collect and receive all royalties otherwise
payable to the undersigned with respect to the musical compositions set forth
on Schedule 1, attached hereto and made a part hereof.
Accordingly, you are hereby authorized and directed to pay to
Antraphil all accrued and future royalties payable with respect to the said
musical compositions.
Very truly yours,
By: /s/ Jeffrey Brown
-----------------------
Jeffrey Brown
EXHIBIT "B"
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EXHIBIT "C"
October 1, 1999
ASCAP
One Lincoln Plaza
New York, NY 10023
Gentlemen:
Please be advised that the undersigned has entered into an agreement
with Antra Music Group, Inc. d/b/a Antraphil Music ("Antraphil"), of 1515
Locust Street, Philadelphia, PA 19102 pursuant to which Antraphil shall have
the sole and exclusive right to collect and receive all royalties otherwise
payable to the undersigned with respect to the musical compositions set forth
on Schedule 1, attached hereto and made a part hereof.
Accordingly, you are hereby authorized and directed to pay to
Antraphil all accrued and future royalties payable with respect to the said
musical compositions.
Very truly yours,
By: /s/ Jeffrey Brown
--------------------
Jeffrey Brown
EXHIBIT "C"
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SCHEDULE 1
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ANTRA MUSIC GROUP, INC.
1515 Locust Street
Philadelphia, PA 19102
Dated: As of October 1, 1999
Jeffrey Brown
(professionally known as "Crush")
c/o James E. Elam, IV
Dilworth Paxson LLP
1735 Market Street
Philadelphia, PA 19103-7595
Dear Mr. Brown:
The following constitutes your and our agreement ("Contract"):
1. Service. During the term of this Contract ("Term") you shall, in
accordance with the provisions hereof, render to us your exclusive services and
furnish to us the services of one (1) or more producers for the purpose of
recording and delivering to us Masters.
2. Term.
(a) The Tenn shall consist of an "Initial Period" and of the
"Renewal Periods" for which we shall have exercised the options hereafter
provided. We shall have seven (7) separate options, each to extend the Term
for a Renewal Period. The Initial Period and each Renewal Period are each
hereafter sometimes referred to generally as a "Contract Period." Each
Renewal Period is hereafter sometimes referred to respectively in
chronological order as the "First Renewal Period," "Second Renewal Period,"
"Third Renewal Period," "Fourth Renewal Period," "Fifth Renewal Period,"
"Sixth Renewal Period" and "Seventh Renewal Period." We may exercise each
option to extend the Term for a Renewal Period by giving you notice of our
election to do so at any time prior to the commencement of the Renewal
Period for which our option is exercised;
(b) (i) The Initial Period shall commence on the date hereof and
shall continue until the date nine (9) months, or such fewer number of days
of which we may advise you in writing, after the initial release in the
United States, if any, of the Album required to be delivered to us in
fulfillment of your "Recording Commitment" (defined below) hereunder for
the Initial Period, which initial release, for purposes of this
subparagraph 2(b)(i) only, shall be deemed to occur on the earlier of: (1)
the date of the actual initial release in the United States, if any, of
that last Album; or (2) the date that is one hundred twenty (120) days
after your delivery to us of that last Album. No days between November 15
and February 15 of the next calendar year shall be taken into account for
purposes of determining the duration or end of that one hundred twenty
(120) day period referred to in the immediately preceding sentence; and
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(ii) Each Renewal Period shall run consecutively, shall commence
upon the expiration of the immediately-preceding Contract Period and
shall continue until the date nine (9) months, or such fewer number
of days of which we may advise you in writing, after the initial
release in the United States, if any, of the Album required to be
delivered to us in fulfillment of your Recording Commitment for that
Renewal Period, which initial release, for purposes of this
subparagraph 2(b)(ii) only, shall be deemed to occur on the earlier
of: (1) the date of the actual initial release in the United States,
if any, of that last Album; or (2) the date that is sixty (60) days
after your delivery to us of that last Album. No days between
November 15 and February 15 of the next calendar year shall be taken
into account for purposes of determining the duration or end of that
sixty (60) day period referred to in the immediately preceding
sentence; and
(c) Notwithstanding the foregoing, if as of the last date on which
we have the right to extend the Term for a Renewal Period pursuant to
subparagraph (b)(i) or (b)(ii) above, we have failed to exercise our option
to extend the Term for the next Renewal Period, the then-current Contract
Period nonetheless shall continue until you notify us in writing of that
failure, referring specifically to this subparagraph 2(c). If we fail to
exercise our option to extend the Term for the next Renewal Period on or
before the date that is sixty (60) days after we receive that specific
written notice from you, then the Term shall end on the date that is sixty
(60) days after we receive that notice from you, as if that date were the
original expiration date of the Term, without any liability or additional
obligation to you in connection therewith.
3. Recording Commitment.
(a) Your "Recording Commitment" is as follows: During each Contract
Period, you shall record for and you shall deliver to us, at a minimum,
Masters sufficient to constitute one (1) LP, plus, at our option, Masters
sufficient to constitute one additional (1) Optional LP; provided, however,
that in the aggregate, without your prior consent, you shall not have the
obligation to deliver to us hereunder in excess of eight (8) Required
Albums. We may exercise our option for the Optional LP to be recorded and
delivered to us during a Contract Period by giving you reasonable, written
notice of our election to do so at any time prior to the expiration of that
Contract Period. Each Album required to be delivered to us in fulfillment
of your Recording Commitment is hereinafter sometimes referred to generally
as a "Required Album." Accordingly, you might be required to record for and
deliver to us as many as eight (8) Required Albums. The Required Albums are
sometimes referred to as the "First Album," "Second Album," "Third Album,"
"Fourth Album," "Fifth Album," "Sixth Album," "Seventh Album" and "Eighth
Album;" and
(b) You shall deliver to us the First Album no later than ninety
(90) days after the date hereof During each Renewal Period, you shall
deliver to us the Required Album no later than three (3) months after the
commencement of the particular Renewal Period, or for an Optional LP no
later than three (3) months after our notice to you in Paragraph 3
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(a) above. You shall not without our prior written consent (which we shall
not unreasonably withhold), however, either (i) commence the recording of
any Masters for any Required Album prior to the date that is ten (10)
months after the date of your delivery to us of the immediately-prior
Required Album or (ii) deliver to us a Required Album prior to the date
that is twelve (12) months after the date of your delivery to us of the
immediately-prior Required Album. Notwithstanding anything to the contrary
contained herein, you shall deliver to us each Required Album as and when
required hereunder so that all eight (8) Required Albums are delivered to
us within seven (7) years after the date hereof.
4. Recording Procedures.
(a) You shall designate and submit to us for our approval the
producer of each of the Masters, the Musical Compositions or other
Selections which shall be embodied in those Masters, all other individuals
rendering services in connection with the recording of those Masters, the
studios at which those Masters shall be recorded, and the dates of
recording of those Masters (collectively referred to as "Recording
Elements"). You shall also prepare and submit to us for our approval, a
proposed budget for all "Recording Costs" (as defined below) setting forth
in such detail as is reasonably required by us all costs and expenses to be
paid or incurred for the production, recording and delivery to us of the
Masters ("Recording Budget"). No recording sessions shall be commenced nor
shall any commitments be made or costs incurred hereunder with respect to
any Masters unless and until we shall have approved in writing each
Recording Element and the Recording Budget for those Masters. If we shall
disapprove of any Recording Element submitted by you or of the Recording
Budget submitted by you, then our decision (including, at our election, our
designation of the Recording Budget or of one (1) or more Recording
Elements in substitution for the Recording Budget or any Recording Elements
submitted by you and disapproved by us) shall be final;
(b) You shall furnish to us at such times as we shall require all
union contract forms, report forms, invoices and other information that we
shall require so that we promptly may pay all Recording Costs, otherwise
comply with any of our obligations in connection with the Masters, release
Phonograph Records embodying the Masters and otherwise exploit the Masters;
(c) At our election, recording sessions for the Masters shall be
conducted under our or our designee's recording license;
(d) Our representatives may attend recording sessions for the
Masters;
(e) You shall deliver to us the Masters promptly after their
completion. All original session tapes and any derivatives or reproductions
thereof shall be delivered to us concurrently, or, at our election,
maintained at a recording studio or other location designated by us, in our
name and subject to our control. Each Master shall be subject to our
approval as commercially and technically satisfactory for the manufacture
and sale of Phonograph Records, and, upon our request, you shall re-record
any Musical Composition or other Selection until a Master that is
commercially and technically satisfactory to us shall have been obtained;
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(f) Each Master shall embody your vocal and instrumental
performances as the sole featured artist of a single Musical Composition
and shall be newly-recorded in its entirety in a recording studio.
Accordingly, no Masters shall be recorded in whole or in part at live
concerts or other live performances. Each Required Album shall embody
recordings of no fewer than ten (10) and no more than thirteen (13) Musical
Compositions. You shall not record or deliver hereunder nor shall we be
obligated to accept Masters constituting a Multiple Album. If, however, you
shall do so and we shall accept those Masters hereunder, then, at our
election, for the purpose of calculating the number of Masters recorded and
delivered hereunder, those Masters shall be deemed to constitute only one
(1) Album;
(g) Any Master Recording which is not recorded or delivered in all
respects in accordance with the terms hereof shall not apply towards the
fulfillment of your Recording Commitment, unless we otherwise consent in
writing. Furthermore, if we shall make any payments with respect to any
Master Recording which is not recorded for or delivered to us in all
respects in accordance with the terms hereof, you shall pay to us, upon our
demand, the amount thereof and, without limiting our other rights and
remedies, we may deduct that amount paid or incurred by us for any reason
from any monies payable by us hereunder; and
(h) If for any reason you delay the commencement of or are
unavailable for any recording sessions for the Masters, you shall pay us,
upon our demand, an amount equal to the expenses or charges paid or
incurred by us by reason thereof. Without limiting our other rights and
remedies, we may deduct that amount paid or incurred by us for any reason
from any monies payable by us hereunder.
5. Recording Costs.
(a) We shall pay the Recording Costs of those Masters recorded at
recording sessions conducted in accordance with the terms hereof in an
amount not in excess of the approved Recording Budget. If the Recording
Costs of any Masters shall exceed the Recording Budget therefor designated
by us or approved by us in writing for any reason, you shall be solely
responsible for and shall pay promptly the excess. If, however, we pay the
excess, you shall pay to us, upon our demand, the amount thereof and,
without limiting our other rights and remedies, we may deduct all such
amounts paid or incurred by us for any reason from any monies payable to
you by us or by any person or entity related to, owned by, controlled by or
controlling us (the "Company Parties"), whether or not in connection with
this agreement or in connection with any other agreement between you and
one or more of the Company Parties. You shall be solely responsible for and
shall pay any payments to any individuals rendering services in connection
with the recording of the Masters which exceed union scale unless the
excess and the recipient thereof shall have been specified in the approved
Recording Budget. You shall also be solely responsible for and shall pay
any penalties incurred for late payments caused by your delay in submitting
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union contracts forms, report forms, or invoices or other documents. If,
however, we pay any excess not approved by us in writing or any penalties,
you shall pay to us, upon our demand, the amount thereof, and, without
limiting our other fights and remedies, we may deduct that amount from any
monies payable by us hereunder; and
(b) The term "Recording Costs" shall include, without limitation,
all minimum union scale payments made to you, all payments made to any
other individuals rendering services in connection with the production and
recording of the Masters (including, without limitation, the individual
producers and co-producers of the Masters), all other payments which are
made pursuant to any applicable law or regulation or the provisions of any
collective bargaining agreement between us and any union or guild
(including, without limitation, payroll taxes and payments to union pension
and welfare funds and/or health and retirement funds), all amounts paid or
incurred for studio or hall rentals, tape, engineering, editing, mixing,
remixing, instrument rentals and cartage, mastering, transportation and
accommodations, immigration clearances, trademark and service mark searches
and clearances, any so-called "per diems" for any individuals (including
you) rendering services in connection with the recording of the Masters,
together with all other amounts paid or incurred in connection with the
production, recording and delivery to us of the Masters. Recording Costs
shall be recoupable from royalties payable by us hereunder.
6. Rights.
(a) All Master Recordings and Audio-Visual Recordings recorded
during the Term which embody your performances, from the inception of the
recording thereof, and all artwork created for use in connection with any
reproduction thereof ("Artwork") shall be deemed, for purposes of copyright
law throughout the universe, works made for hire for us by you and all
other persons rendering services in connection with those Master
Recordings, Audio-Visual Recordings and Artwork as our employees for hire.
Those Master Recordings and Audio-Visual Recordings, from the inception of
the recording thereof, and all Phonograph Records and other reproductions
made therefrom, together with the performances embodied therein and all
copyrights therein and thereto and all renewals and extensions thereof, and
all Artwork and all copyrights in and to all Artwork and all renewals and
extensions thereof, shall be entirely our property throughout the universe,
free of any claims whatsoever by you, or any other person, firm, or
corporation. Accordingly, we shall have the exclusive right to obtain
registration of copyright (and all renewals and extensions) throughout the
universe in those Master Recordings, Audio-Visual Recordings and Artwork in
our name, as the owner and author thereof. If for any reason we shall be
deemed not to be the author of those Master Recordings, Audio-Visual
Recordings or Artwork, this Contract shall constitute an irrevocable
transfer to us of ownership of copyright (and all renewals and extensions)
throughout the universe in those Master Recordings, Audio-Visual Recordings
or Artwork (as applicable) and, accordingly, you hereby grant, transfer,
convey and assign directly to us the entire fight, title and interest
throughout the universe, including, without limitation, the copyright, the
fight to secure copyright registration and any and all copyright renewal
fights, in and to all Master Recordings and Audio-Visual Recordings
recorded during the Term which embody your performances and in and to all
Artwork;
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(b) You shall, upon our request, cause to be executed and delivered
to us transfers of ownership of copyright (and all renewals and extensions)
in those Master Recordings, Audio-Visual Recordings and Artwork and any
other documents as we may deem necessary or appropriate to vest in us the
rights granted to us in this Contract, and you hereby irrevocably appoint
us your attorney-in-fact for the purpose of executing those transfers of
ownership and other documents in your names;
(c) Without limiting the generality of the foregoing, we and any
person, firm, or corporation designated by us shall have the exclusive,
perpetual right throughout the universe to manufacture, sell, distribute
and advertise Phonograph Records, Audio-Visual Records and other
reproductions embodying those Master Recordings or Audio-Visual Recordings
under any trademarks, trade names or labels, and to lease, license, convey
and otherwise exploit and use those Master Recordings by any method
(whether now known or unknown) and in any medium (whether now known or
unknown) and to perform publicly Phonograph Records, Audio-Visual Records
and other reproductions embodying those Master Recordings or Audio-Visual
Recordings, all upon such terms as we may approve, or we may refrain from
doing any or all of the foregoing;
(d) If you are entitled to any reversion of the copyright or other
right, title and interest in and to Masters (or any of them) pursuant to
the laws of the United States or any other country of the world, and that
reversion is effected, then you hereby irrevocably license to us
exclusively the entire worldwide right, title and interest, including,
without limitation, the copyright in and to any such Master so acquired by
you pursuant to the laws of the United States or any other country of the
world, all for the duration of the copyright (and any renewals or
extensions thereof) in and to such Master ("License Period"). In that
event, we and any person, firm or corporation designated by us shall have
the exclusive right throughout the universe during the License Period to
manufacture, sell, distribute and advertise Phonograph Records,
Audio-Visual Records and other reproductions embodying the Masters or
Audio-Visual Recordings under any trademarks, trade names or labels or to
lease, license, convey and otherwise exploit and use those Masters or
Audio-Visual Recordings by any method (whether now known or unknown) and in
any medium (whether now known or unknown) and to perform publicly
Phonograph Records, Audio-Visual Recordings and other reproductions
embodying the Masters or Audio-Visual Recordings all upon such terms as we
may approve, or we may refrain from doing any or all of the foregoing, all
in accordance with the provisions of this Contract. We shall have no
obligation to pay to you any monies in connection with the grant set forth
in this subparagraph 6(d) except that we shall continue to credit to your
royalty account hereunder royalties earned by you in accordance with the
provisions hereof on exploitations of the Masters occurring during the
License Period as if we had continued to own the entirety of all right,
title and interest, including, without limitation, the copyright in and to
the Masters or Audio-Visual Record Recordings in accordance with the
provisions of subparagraph 6(a), (b) and (c) above. You expressly
acknowledge and agree that no provision of any applicable law, rule or
regulation (including, without limitation, the copyright laws and
regulations of the United States or Canada) permits you to terminate
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the transfer, grant, conveyance or assignment to us of the copyright in and
to Master Recordings or Audio-Visual Recordings provided in this paragraph
6 or any other reversion of the copyright or other right, title and
interest in and to the Masters. If any such law, rule or regulation shall
apply at any time after the date hereof, you shall not exercise any rights
pursuant to that law, rule or regulation; and
(e) All matters relating to trademarks, notices, including, without
limitation, UPC symbols (i.e., barcoding), or disclosures deemed advisable
by us or our attorneys, and any matter other than the cover layout and the
picture of the art to be used on the particular Required Album will be
determined by us in our sole discretion.
7. Name and Likeness.
(a) We and any person, firm or corporation designated by us shall
have the perpetual, worldwide right to use and to permit others to use your
name (both legal and professional, and whether presently or hereafter used
by you), likeness, and other identification, and biographical material
concerning you, and the name and likeness of any producer rendering
services in connection with Master Recordings recorded by you during the
Term for purposes of trade and advertising. We shall have the further
right to refer to you during the Term as our exclusive recording artist and
you in your activities in the entertainment field shall use reasonable
efforts to be billed and advertised during the Term as our exclusive
recording artist. The fights granted to us pursuant to this subparagraph
7(a) with respect to your name, likeness, other identification and
biographical material concerning you shall be exclusive during the Term and
nonexclusive thereafter. Accordingly, but without limiting the generality
of the foregoing, you shall not authorize or permit any person, firm, or
corporation other than us to use during the Term your legal or professional
name or your likeness in connection with the advertising or sale of
Phonograph Records. Notwithstanding anything to the contrary contained
herein, during the Term, you shall not use any name other than the
professional name utilized by you as of the date of this Contract without
first obtaining our prior written consent thereto;
(b) You are the sole owner of each professional name used by you
during the Term and no other person, firm or corporation has or will have
the right to use that name in connection with Phonograph Records during the
Term. We shall have the right, at our election, to cause a search to be
instituted to determine whether there have been any third party uses of any
names used by you for Phonograph Record purposes. Further, we shall have
the right, at our election, to apply for registration of your name to be
made in favor of you for Phonograph Record and/or other entertainment
purposes in the United States Patent and Trademark Office or such other
federal institution as may then be charged with accepting those
registrations. Any amounts paid by us in connection with any search or
registration shall be deemed to be Recording Costs pursuant to subparagraph
5(b) above. If any search undertaken by us indicates or leads us reasonably
to believe that your name should not be used hereunder, then you and we
shall determine mutually a substitute name to be used by you. Nothing
contained herein shall release you from your indemnification of us in
respect of our use of any of your names, whether legal or professional or
otherwise; and
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(c) (i) We and our licensees shall have the exclusive rights and may
grant others the rights to use reproductions or adaptations of
packaging artwork, graphic materials used for marketing or
publicity, and other materials incorporating your name,
portraits, pictures and likenesses (including, without
limitation, professional, group, or other assumed or fictitious
names or sobriquets used by you and further including any logo
or trademark used by or controlled by you) on merchandise of any
kind other than Records (collectively the "Merchandise Uses"),
without payment of additional compensation to you, except as
provided in Paragraph 7(c)(ii) below.
(ii) If we receive any payments for any Merchandise Uses, your
royalty account shall be credited with fifty percent (50%) of
the net amount of those receipts, as computed after deduction of
the greater of the following amounts: (A) any direct expenses
actually incurred by us in connection with Merchandise Uses; and
(B) a charge equal to twenty percent (20%) of the gross amount
of those receipts.
8. Advances. Provided you are in compliance with all terms, provisions
and obligations contained herein, we shall pay to you as advances recoupable
from royalties earned by you hereunder the following amounts for the following
Required Albums payable at the following times:
(a) For the First Album, Twelve Thousand Five Hundred Dollars
($12,500), $3,500 of which you acknowledge having received already (which
payment, although made prior to the date hereof, shall be deemed to have
been made in connection with the First Album), Five Thousand Dollars
($5,000) payable upon full execution of this Agreement, $2,500 of which you
direct us to pay to your attorney, James Elam's firm, Dilworth Paxson LLP
(collectively the "Execution Advance"), Two Thousand Five Hundred Dollars
($2,500) on or before thirty (30) days after the full execution of this
Agreement (the "First Album Initial Partial Advance"), One Thousand Five
Hundred Dollars ($1,500) on or before sixty (60) days after the full
execution of this Agreement (the "First Album Final Partial Advance"), and
the Fund Balance (defined below) payable promptly after the "Delivery Date"
(defined below) for the First Album. The "Recording Fund" for the First
Album shall be Fifty Thousand Dollars ($50,000); and
(b) For each Required Album other than the First Album: (A) the
"Pre-Delivery Payment" (defined below), payable promptly after our receipt
of your written notice indicating that recording sessions for the Required
Album for which the advance is payable have actually commenced in
accordance with all of the terms of this Contract (including, without
limitation, the provisions of subparagraph 4(a) above); and (B) the Fund
Balance (defined below), payable promptly after the Delivery Date. For each
Required Album, if any, after the First Album, the Recording Fund shall be
the "Formula Amount" (defined below), but no less than the "Minimum Amount"
and no more than the "Maximum Amount" set forth in the Schedule below:
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The "Formula Amount" for the Second Album shall mean an amount equal
to two-thirds (2/3) of the royalties (after retention of reserves) earned
by you hereunder from Net Sales through Normal Retail Distribution
Channels in the United States of the First Album, computed as of end of
the applicable "Fund Calculation Period" (defined below) and for each
Required Album after the Second Album shall mean an amount equal to the
product of (i) one-half (1/2) and (ii) two-thirds (2/3) of the royalties
(after retention of reserves) earned by you hereunder from Net Sales
through Normal Retail Distribution Channels in the United States of the
two (2) Required Albums initially released immediately prior to the
Required Album for which the Formula Amount is being calculated, computed
as of the end of the applicable Fund Calculation Period for Required
Albums in question. The term "Fund Calculation Period" shall mean the
period commencing on date of the initial commercial release in the United
States of the Required Album for which royalty earnings are being
computed and ending on the date nine (9) months thereafter;
(c) The term "Pre-Delivery Payment" shall mean an amount equal to
five percent (5%) of the "Minimum Amount" for the applicable Required Album
set forth in the Schedule above. The term "Fund Balance" shall mean the
amount by which the Recording Fund exceeds the aggregate of the Recording
Costs for the applicable Required Album, the Pre-Delivery Payment for the
applicable Required Album (or the Execution Advance with respect to the
First Album along with the First Album Initial Partial Advance and the
First Album Final Partial Advance) and any other advances paid in
connection with the applicable Required Album. The term "Delivery Date"
shall mean the later of the date of your delivery to us of all Masters
constituting the applicable Required Album in accordance with all of the
terms of this Contract and the date on which we determine the aggregate
Recording Costs for that Required Album. Notwithstanding anything contained
herein, for any Album you deliver after the date delivery was due, the
Recording Fund for that Album shall be the applicable Minimum Amount for
that Album listed in Paragraph 8(b) above; and
(d) You acknowledge and agree that any and all advances paid by us
hereunder shall constitute prepayment of session union scale to you, and
you agree to timely complete and appropriately deliver any documentation
required by the applicable union to document and effectuate each such
prepayment.
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8A. Minimum Annual Compensation
(a) The aggregate amount of the compensation paid to you under this
agreement shall not be less than the "Designated Dollar Amount" (as defined
below) per Fiscal Year. "Fiscal Year", in this paragraph, means the annual
period beginning on the date of commencement of the Term, and each
subsequent annual period through the seventh such annual period, during
the Term.
(b) If you have not received compensation equal to the Designated
Dollar Amount under this agreement for a Fiscal Year, we shall pay you the
amount of any deficiency before the end of that Fiscal Year; at least forty
(40) days before the end of each Fiscal Year you shall notify us if you
have not received compensation equal to the Designated Dollar Amount under
this agreement for that Fiscal Year, and of the amount of the deficiency.
Each such payment shall constitute an Advance and shall be applied in
reduction of any and all monies due or becoming due to you under this
agreement. We may not withhold or require you to repay any payment made to
you pursuant to or subject to this paragraph 8A.
(c) As used in this paragraph 8A, the "Designated Dollar Amount"
shall be:
(1) Nine Thousand Dollars ($9,000) for the first Fiscal Year of
this agreement;
(2) Twelve Thousand Dollars ($12,000) for the second Fiscal Year
of this agreement; and
(3) Fifteen Thousand Dollars ($15,000) for each of the third
through seventh Fiscal Years of this agreement.
If in any Fiscal Year the aggregate amount of the compensation paid to you
under this agreement exceeds the Designated Dollar Amount, such excess
compensation shall apply to reduce the Designated Dollar Amount for any
subsequent Fiscal Years.
(d) You acknowledge that this paragraph is included to avoid
compromise of our rights (including our entitlement to injunctive relief)
by reason of a finding of applicability of California law, but does not
constitute a concession by us that California law is actually applicable.
9. Royalties.
(a) In consideration of our copyright ownership set forth herein,
any rights licensed to us herein, our right to use your name, likeness and
biographical materials as provided herein, and the other agreements,
representations and warranties contained herein, on Net Sales of Phonograph
Records embodying Masters, we shall pay to you a royalty computed by
multiplying the Royalty Base Price, less the deductions hereafter provided,
by the applicable royalty rate set forth below:
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(i) On Phonograph Records sold in the United States the royalty rate
shall be:
(A) (1) Eleven percent (11%) on Albums;
(2) The royalty rate pursuant to subparagraph 9(a)(i)(A)(1)
above on Net Sales through Normal Retail Distribution Channels in
the United States ("Qualifying Sales") of a particular Required
Album embodying solely newly-recorded Masters in the form of
Conventional cassette tapes and Compact Discs C "Qualifying
Album") which exceed five hundred thousand (500,000) units, but
which do not exceed one million (1,000,000) units, shall be the
royalty rate set forth in that subparagraph, plus one-quarter
percent (.25%). The royalty rate pursuant to subparagraph
9(a)(i)(A)(1) above on Qualifying Sales of a particular
Qualifying Album in the United States which exceed one million
(1,000,000) units shall be the royalty rate set forth in that
subparagraph (without regard to the operation of the provisions
of this subparagraph 9(a)(i)(A)(2) plus one-half percent (.50%).
Any increases in the royalty rate set forth in subparagraph
9(a)(i)(A)(1) above resulting from the operation of the
provisions of this subparagraph 9(a)(i)(A)(2) shall be
disregarded for the purpose of computing any other royalty rates
pursuant to this paragraph 9 which apply to sales of Records
outside the United States or which are a percentage of or
otherwise based upon the royalty rate set forth in subparagraph
9(a)(i)(A)(1) above; and
(B) Seven percent (7%) on Singles;
(ii) On Phonograph Records sold in Canada the royalty rate shall be:
(A) Nine percent (9%) on Albums; and
(B) Seven percent (7%) on Singles;
(iii) On Phonograph Records sold in the United Kingdom the royalty
rate shall be:
(A) Eight percent (8%) on Albums; and
(B) Six percent (6%) on Singles;
(iv) On Phonograph Records sold in Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Holland, Italy, Norway, Portugal, Spain, Sweden
or Switzerland, the royalty rate shall be:
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(A) Seven percent (7%) on Albums; and
(B) Five percent (5%) on Singles;
(v) On Phonograph Records sold in Japan, Australia or New Zealand, the
royalty rate shall be:
(A) Seven percent (7%) on Albums; and
(B) Five percent (5%) on Singles; and
(vi) On Phonograph Records sold outside the United States, Canada, the
United Kingdom and those countries set forth in subparagraphs 9(a)(iv) and
(v) above, the royalty rate shall be:
(A) Five and One half percent (5.5%) on Albums; and
(B) Three and One half percent (3.5%) on Singles;
(b) Notwithstanding the foregoing:
(i) (A) On Phonograph Records sold through a direct mail or mail
order distribution method (including, without limitation through
so-called "record clubs"), or through any combination of the
foregoing, the royalty rate shall be one-half (1/2) of the otherwise
applicable royalty rate, but in no event shall your royalty in respect
of those sales exceed an amount equal to fifty percent (50%) of the
Net Receipts from the sale of those Phonograph Records (whether or not
sold by an affiliate of ours);
(B) On Phonograph Records sold through retail stores in
connection with special radio or television advertisements (sometimes
referred to as "key outlet marketing") ("Key Outlet Campaign") whether
alone or in combination with any direct mail or mail order
distribution method, the royalty rate shall be one hundred percent
(100%) of the otherwise applicable royalty rate and notwithstanding
anything to the contrary herein, we shall have the right to recoup
fifty percent (50%) of any and all of the costs paid or incurred by us
or our licensees in respect of such Key Outlet Campaigns from any and
all royalties earned by you under this Contract;
(ii) On Phonograph Records sold for use as premiums or in connection
with the sale, advertising', or promotion of any other product or service,
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the royalty rate shall be one-half (1/2) of the otherwise applicable royalty
rate and the Royalty Base Price of those Phonograph Records shall be deemed to
be an amount equal to the monies actually received by us from the sale of
those Phonograph Records, unless manufactured and sold by an affiliate or
licensee of ours, in which event the Royalty Base Price shall be deemed to be
the price used by that affiliate or licensee in accounting to us;
(iii) On Mid-Price Records the royalty rate shall be two-thirds (2/3)
of the otherwise applicable royalty rate, and on Budget Records the royalty
rate shall be one-half (1/2) of the otherwise applicable royalty rate;
(iv) On Phonograph Records sold to the United States Government, its
subdivisions, departments or agencies (including Phonograph Records sold
for resale through military facilities) or to educational institutions or
libraries, the royalty rate shall be one-half (1/2) of the otherwise
applicable royalty rate;
(v) On Long-Play Singles, the royalty rate shall be one half (1/2) of
the otherwise applicable royalty rate for Albums, and on EPs the royalty
rate shall be two-thirds (2/3) of the otherwise applicable royalty rate for
Albums;
(vi) On Multiple Albums, the royalty rate shall be the lesser of: (A)
the otherwise applicable royalty rate and (B) the otherwise applicable
royalty rate multiplied by a fraction, the numerator of which is the
Royalty Base Price of the Multiple Album and the denominator of which is
the product of the Royalty Base Price of a top-line single-disc Album in
the configuration in question and the number of discs contained in the
Multiple Album;
(vii) On Phonograph Records in the form of Digital Records the royalty
rate shall be:
(A) Seventy Five percent (75%) of the otherwise applicable
royalty rate for all Digital Records other than Compact Discs; and
(B) Eighty percent (80%) of the otherwise applicable royalty rate
on Compact Discs;
(viii) On Masters licensed by us to others for their manufacture and
sale of Phonograph Records or for any other uses (other than those for
which a royalty is payable in accordance with subparagraph (x)(B) below),
your royalty shall be an amount equal to fifty percent (50%) of our Net
Receipts from the sale of those Phonograph Records or from those other uses
of the Masters;
(ix) On Audio-Visual Recordings embodying the performances of Artist,
your royalty shall be as follows:
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(A) On Audio-Visual Records your royalty shall be computed in
accordance with the provisions of this paragraph 9 applicable to
Albums, except on sales of Audio-Visual Records in the United States
the royalty rate pursuant to subparagraph 9(a)(i) above shall be
deemed to be eighteen percent (18%) and on sales of Audio-Visual
Records outside of the United States the royalty rate pursuant to
subparagraphs 9(a)(ii) through 9(a)(v) above shall be deemed to be
twelve percent (12%). Notwithstanding anything to the contrary
contained herein, the royalty payable to you pursuant to this
subparagraph (ix)(A) on the exploitation of Audio-Visual Recordings in
the United States or Canada shall be inclusive of any royalties or
other monies required to be paid or incurred by us (or otherwise
deducted from monies payable to us) to any person, firm or corporation
for the synchronization, reproduction and/or public performance of any
Selection in the Audio-Visual Recording in question and, without
limiting any of our other rights or remedies hereunder or otherwise,
we shall have the right to deduct from the royalty payable to you
pursuant to this subparagraph (ix)(A) an amount equal to those sums
required to be paid to any person, firm or corporation in connection
therewith;
(B) On Audio-Visual Records manufactured and sold by a
non-affiliated licensee of ours, however, in the United States or
elsewhere, your royalty shall be an amount equal to fifty percent
(50%) of our Net Receipts from the sale of those Audio-Visual Records
(rather than the royalty computed in accordance with the immediately
preceding subparagraph (A); and
(C) Notwithstanding anything to the contrary contained herein,
the exploitation of Audio-Visual Recordings by means of any so-called
"video jukebox" shall be deemed to be non-royalty bearing and
promotional in nature for all purposes of this Contract; and
(D) On Mid-Price Audio-Visual Records the royalty rate shall be
three-fourths (3/4) of the otherwise applicable royalty rate, and on
Budget Audio-Visual Records the royalty rate shall be one-half (1/2)
of the otherwise applicable royalty rate;
(x) On New Records your royalty shall be the lesser of the following:
(A) Seventy-five percent (75%) of the otherwise applicable
royalty rate applied to the Royalty Base Price of the New Record
concerned; and
(B) An amount equal to the product of (1) our Net Receipts from
the exploitation of those New Records, and (2) the otherwise
applicable royalty rate;
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(c) Notwithstanding the foregoing:
(i) No royalties shall be payable on Phonograph Records furnished
as free or bonus Phonograph Records to members, applicants, or other
participants in any record club or other direct mail distribution method;
on Phonograph Records distributed for promotional purposes to radio
stations, television stations or networks, record reviewers, or other
customary recipients of promotional Phonograph Records; on so-called
"promotional sampler" Phonograph Records; on Phonograph Records sold as
scrap or as "cut-outs"; or on Phonograph Records (whether or not intended
for sale by the recipient) furnished on a no-charge or free basis (such as,
but not limited to, Phonograph Records commonly described in the record
industry as "free goods" or "freebies") or sold at less than fifty percent
(50%) of their regular wholesale price to distributors, subdistributors,
dealers, or others, whether or not the recipients thereof are affiliated
with us. We shall not distribute Phonograph Records embodying solely
Masters in the United States at no-charge for sale by the recipient thereof
other than in accordance with our then-current general policy applicable at
the time of our distribution of those Records which, in the United States
on the date of this Contract, is the distribution of the following
Phonograph Records at no charge intended for sale by the recipient thereof
(1) on a regular basis, as follows: Fifteen (15) Albums and EPs in the form
of Conventional vinyl discs and cassette tapes for each eighty-five (85) of
those Albums and EPs sold (that is, fifteen (15) Albums and EPs in the form
of conventional vinyl discs and cassette tapes are distributed at no charge
out of each one hundred (100) of those Albums and EPs distributed for sale
by the recipient thereof); twenty (20) Albums and EPs in the form of
Digital Records (including, without limitation, Compact Discs) for each
eighty (80) of those Albums sold (that is, twenty (20) Albums in the form
of Digital Records are distributed at no charge out of each one hundred
(100) of those Albums distributed for sale by the recipient thereof); and
thirty (30) Singles and Long-Play Singles in all forms and configurations
for each seventy (70) Singles and Long-Play Singles sold in any form or
configuration (that is, thirty (30) Singles and Long-Play Singles in all
forms and configurations are distributed at no charge out of each one
hundred (100) Singles and Long-Play Singles distributed in any form or
configuration for sale by the recipient thereof); and thirty (30)
Phonograph Records other than Albums, EPs, Singles and Long-Play Singles,
if any, for each seventy (70) of those Phonograph Records sold in'any form
or configuration (that is, thirty (30) Phonograph Records other than
Albums, EPs, Singles and Long-Play Singles, if any, are or would be
distributed at no charge out of each one hundred (100) of those Phonograph
Records distributed for sale by the recipient thereof); and (2), from time
to time in connection with short-term or other special sales programs of
limited duration, such additional Records as we in the exercise of our
business judgment determine. We shall distribute Phonograph Records in the
form of New Records embodying solely Masters in the United States at
no-charge for sale by the recipient thereof in accordance with our
then-current general policy applicable to Compact Discs at the time of our
distribution of those Records;
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(ii) Royalties on Phonograph Records (whether or not intended for
sale by the recipient thereof) sold at a discount to distributors,
subdistributors, dealers, or others, whether or not affiliated with us
(except for Phonograph Records sold at less than fifty percent (50%) of
their regular wholesale price, for which no royalties are payable
hereunder) shall be reduced in the same proportion as the regular wholesale
price of those Phonograph Records is reduced on those sales;
(iii) For purposes of computing royalties, there shall be
deducted from the Royalty Base Price (or other applicable price, if any,
upon which royalties are calculated) of Phonograph Records hereunder an
amount equal to twenty percent (20%) thereof for all Phonograph Records in
the form of Conventional cassette tapes and twenty-five percent (25%)
thereof for Phonograph Records in all other forms, whether now known or
hereafter devised;
(iv) Phonograph Records distributed by any of our affiliates
shall be deemed sold for the purposes of this Contract only if sold by that
affiliate to one of its independent third party customers and final payment
is received therefor by us in United States Dollars in the United States;
(v) The royalty payable to you hereunder on a Phonograph Record
or other device embodying Masters together with other Master Recordings
shall be computed by multiplying the otherwise applicable royalty rate by
the "Reduction Factor." As used herein, the term "Reduction Factor" shall
mean, at our election, (A) a fraction, the numerator of which shall be the
number of Selections contained on the Masters which are embodied on that
Phonograph Record or other device and the denominator of which shall be the
total number of Selections embodied on that Phonograph Record or other
device or (B) a fraction, the numerator of which shall be the playing time
of the Selections contained on the Masters which are embodied on that
Phonograph Record or other device and the denominator of which shall be the
total playing time of the Phonograph Record or other device in question.
For any Phonograph Record or other device for which a finite running or
playing time does not exist, the running or playing time of that Phonograph
Record or other device shall be deemed to be one hundred twenty (120)
minutes; and
(vi) The royalty payable to you hereunder and the Recording Costs
hereunder on a Master embodying your performances jointly with any other
artist or musician to whom we are obligated to pay a royalty in respect of
that Master shall be computed by multiplying the otherwise applicable
royalty rate and Recording Costs by a fraction, the numerator of which
shall be one (1) and the denominator of which shall be the sum of one (1)
and the total number of other artists or musicians whose performances are
embodied on that Master; and
(d) You hereby expressly authorize us and our licensees to collect and
receive on your behalf any royalties or other monies which may be payable in the
United
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States pursuant to the Audio Home Recording Act allocable to featured performers
and which is otherwise determined to be payable to you in respect of your
performances in Masters ("AHRA Monies"). We shall credit to your account that
portion of AHRA Monies received by us which is specifically allocable to Masters
and otherwise payable to you (less any portion thereof which may be payable to
any third party, including, without limitation, any producer of Masters). You
shall execute any further documentation which we reasonably deem necessary or
desirable to effectuate the foregoing provisions of this subparagraph (d).
Without limiting the foregoing, you shall not have the right hereunder or
otherwise to be paid or to have credited to your account any portion of AHRA
Monies received by us or otherwise received on our behalf pursuant to the Audio
Home Recording Act which is allocable to the owner of the sound recording.
10. Royalty Payments and Accountings.
(a) We shall send to you statements for royalties payable hereunder on
or before the date ninety (90) days after the end of each of our then-current
semi-annual accounting periods (currently ending on June 30 and December 31),
together with payment of royalties, if any, earned by you hereunder during the
semiannual period for which the statement is rendered (based on our receipts in
the United States during the accounting period for which the statement is
rendered), less all advances and charges under this Contract. Notwithstanding
the foregoing, after the Term, no royalty statement shall be required to be
rendered for any semi-annual accounting period in which less than Five Thousand
Dollars ($5,000) in royalties are credited to your account (whether by
exploitation of Masters or liquidation of reserves) unless (i) royalties are
otherwise actually payable to you for that semi-annual accounting period, or
(ii) you notify us in writing of your request that we render to you a statement
for the semi-annual accounting period in which we receive that request on the
date otherwise required hereunder. We shall have the right to retain, as a
reserve against charges, credits, or returns, such portion of payable royalties
as shall be commercially reasonable and customary in the industry in our best
business judgment. You shall reimburse us on demand for any overpayments, and we
may also deduct the amount thereof from any monies payable to you hereunder.
Royalties paid by us on Phonograph Records subsequently returned shall be deemed
overpayments;
(b) No royalties shall be payable to you on sales of Phonograph
Records or other exploitations of Masters by any of our affiliates or licensees
until payment on those sales has been received by us in the United States. Sales
or other exploitations by an affiliate or licensee shall be deemed to have
occurred in the semiannual accounting period during which that affiliate or
licensee shall have rendered to us and we shall have received in the United
States accounting statements and payments for those sales or other exploitations
of Masters;
(c) (i) Royalties on exploitations of Masters outside of the United
States shall be computed in the national currency in which our licensees or
affiliates or other distributors pay us, shall be credited to your royalty
account hereunder at the same rate of exchange at which our licensees or
affiliates or other distributors pay us, and shall be proportionately
subject to any foreign withholding
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or comparable taxes which may be imposed upon our receipts. You shall not
be entitled to any portion of a tax credit which may be available to us or
to any of our licensees or affiliates in connection with any foreign taxes
withheld from our receipts, from the applicable price in computing the
Royalty Base Price, or from any other source; and
(ii) If we shall not receive payment in United States dollars in
the United States for any exploitations of Masters outside of the United
States, royalties on those exploitations shall not be credited to your
royalty account hereunder. If all advances and other recoupable charges
under this Contract are then-currently recouped and if we are able to do
so, we shall accept payment for those exploitations in foreign currency and
shall deposit in a foreign bank or other depository, at your expense, in
that foreign currency, that portion thereof, if any, as shall equal the
royalties which would have been payable to you hereunder on those
exploitations had payment for those exploitations been made to us in United
States dollars in the United States. The foregoing deposit shall not be
reflected on your accounting statements hereunder. Deposit as aforesaid
shall fulfill our royalty obligations hereunder as to those sales. If any
law, ruling or other governmental restriction limits the amount an
affiliate or licensee can remit to us, we may reduce your royalties
hereunder by an amount proportionate to the reduction in our affiliate's or
licensee's (as appropriate) remittance to us;
(d) You shall be deemed to have consented to all royalty statements
and all other accountings rendered or required to be rendered by us hereunder
and each royalty statement and other accounting shall be conclusive, final, and
binding, shall constitute an account stated, and shall not be subject to any
objection for any reason whatsoever, unless you give us notice stating the
specific basis for that objection within one (1) year after the date rendered or
required to be rendered. You may not maintain any action, suit, or proceeding of
any nature against us in respect of any royalty statement or other accounting
rendered or required to be rendered by us hereunder (or in respect of the
accounting period to which it relates or was to relate) unless you commence that
action, suit, or proceeding against us in a court of competent jurisdiction
within one (1) year after the date rendered or required to be rendered. If you
shall commence an action, suit, or proceeding against us concerning royalty
statements or other accountings rendered or required to be rendered by us to you
hereunder, the scope of that action, suit or proceeding shall be limited to a
determination of the amount of royalties, if any, payable to you for the
accounting periods in question, and your sole remedy shall be the recovery of
those royalties;
(e) We shall maintain books and records concerning the sale of
Phonograph Records hereunder. You shall have the right to designate an
independent certified public accountant on your behalf (who shall not be
compensated on a contingent fee basis), at your own expense, to examine those
books and records (but not any of our books or records relating to the
manufacture of Phonograph Records hereunder) solely for the purpose of verifying
the accuracy of royalty statements and other accountings rendered by us
hereunder, only during our normal business hours and only upon reasonable
written notice. Our books and records relating to a particular royalty statement
or other
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accounting may be examined only within one (1) year after the date rendered or
required to be rendered. We shall have no obligation to permit you to examine
our books or records relating to any particular royalty statement or other
accounting more than once. Prior to rendering a report to you with respect to
the examination of our books and records as aforesaid, the independent certified
public accountant engaged by you shall first review his or her tentative written
findings with a designated representative of our finance department in order to
remedy any factual errors and clarify any issues that may have resulted from
misunderstanding. You hereby acknowledge that our books and records contain
confidential trade information. Neither you nor your independent certified
public accountant or other representatives shall communicate at any time to any
others or use on behalf of any other person, firm or corporation any facts or
information obtained as a result of any such examination of our books and
records. Further, prior to the commencement of any examination of our books and
records in accordance with the provisions of the subparagraph (e), you shall
cause the independent certified public accountant engaged by you to sign a
letter in a form approved by us which acknowledges his or her agreement (and the
agreement of his or her firm) to be bound by the foregoing. The rights
hereinabove granted to you shall constitute your sole and exclusive rights to
examine our books and records;
(f) We shall have the right to deduct from any monies payable to you
hereunder any amounts paid by us to you or to any person, firm or corporation
representing you or incurred by us on your behalf or on behalf of any person,
firm or corporation representing you, if those monies are not otherwise required
to be paid or incurred by us hereunder (unless we expressly agree in writing
that the payment in question is non-deductible or is only recoupable from
royalties earned by you hereunder). Accordingly, all amounts paid or incurred by
us for the services of third parties to market and promote sales of Phonograph
Records embodying Masters shall be recoupable from royalties earned by you
hereunder; and
(g) We shall have the right to deduct from any monies payable to you
hereunder any amounts which are required to be deducted from any of those monies
under any statute, regulation, treaty or other law, or under any union or guild
agreement, and you shall promptly execute and deliver to us any forms or other
documents as may be required in connection therewith. If we fail for any reason
to deduct and instead pay any of those monies required to be deducted from
monies payable to you hereunder, and if, as a result, we are required by any
statute, regulation, treaty or other law or union or guild agreement to pay to
any third party any amounts which were paid to you but which were required to be
deducted, then, without limiting any of our other rights or remedies in that
event, you shall pay to us, upon our demand, the amount of those monies which
were paid to you but which were required to be deducted, or, at our election, we
may deduct from any monies payable to you hereunder the amount of those monies
paid to you but which were required to be deducted.
11. Musical Composition Licenses.
(a) You hereby grant to us and our designees the irrevocable non-
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exclusive right to reproduce each Controlled Composition on Phonograph Records
and to distribute those Phonograph Records in the United States and Canada on
the following terms and conditions:
(i) Mechanical royalties shall be payable for Controlled Compositions
on Net Sales of Phonograph Records in the United States and Canada at the
following rates:
(A) On Phonograph Records sold in the United States, the rate for
each Controlled Composition embodied thereon shall be the United States
Controlled Composition Mechanical Rate. The term "United States
Controlled Composition Mechanical Rate" shall mean an amount equal to
seventy-five percent (75%) of the "United States Mechanical Rate." The
term "United States Mechanical Rate" shall mean an amount equal to the
minimum statutory royalty rate (without regard to playing time)
provided in the United States Copyright Act for the reproduction of
Musical Compositions as of the "Determination Date" (defined below);
(B) On Phonograph Records sold in Canada, the rate for each
Controlled Composition embodied thereon shall be the Canadian
Controlled Composition Mechanical Rate. The term "Canadian Controlled
Composition Mechanical Rate" shall mean an amount equal to seventy-five
percent (75%) of the Canadian Mechanical Rate. The term "Canadian
Mechanical Rate" shall mean an amount equal to the minimum statutory
royalty rate (without regard to playing time) provided in the Canadian
Copyright Act for the reproduction of Musical Compositions as of the
Determination Date. If no such statutory royalty rate exists, then the
term "Canadian Mechanical Rate" shall mean the minimum, standard
mechanical royalty rate provided in mechanical licenses between record
companies and unrelated publishers in Canada which are issued by
C.M.R.R.A. (or any successor) as of the Determination Date. If no such
standard mechanical royalty rate exists, however, then the term
"Canadian Mechanical Rate" shall mean the mechanical royalty rate which
we may, in good faith, negotiate at arm's-length with unrelated
publishers effective as of the Determination Date. In no event,
however, shall the number of Canadian pennies constituting the Canadian
Mechanical Rate exceed the number of United States pennies constituting
the United States Mechanical Rate in effect as of the Determination
Date; and
(C) The term "Determination Date" shall mean the date of delivery
to us of the first (1st) Master embodying the Musical Composition in
question or, if earlier, the date on which that first (1st) Master was
required to be delivered to us hereunder;
(ii) Notwithstanding the foregoing: The mechanical royalty rate on a
Controlled Composition which is an arrangement of a public domain work
shall be
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that percentage of the United States Controlled Composition Mechanical Rate
or the Canadian Controlled Composition Mechanical Rate, as applicable, that
is equal to the percentage of the arrangement of the Controlled Composition
which is original in the arrangement and therefore subject to copyright in
accordance with the rules and regulations of ASCAP and/or BMI and for which
ASCAP and/or BMI provides written documentation of that percentage of the
originality in and to that arrangement of a Controlled Composition; the
mechanical royalty rate for a Controlled Composition recorded in an EP,
Long-Play Single, Mid-Price Record, Budget Record or Records sold through
record clubs shall be three-fourths (3/4) of the United States Controlled
Composition Mechanical Rate or the Canadian Controlled Composition
Mechanical Rate, as applicable; if any particular Record (including,
without limitation, so-called "cassette Singles") embodies more than one
(1) of the same or different recordings of the same Controlled Composition,
then the United States Controlled Composition Mechanical Rate or Canadian
Controlled Composition Mechanical Rate, as the case may be, shall be
payable only once on all reproductions of that Controlled Composition in
that Record; and no mechanical royalties shall be payable for the
reproduction of any Controlled Composition on a Phonograph Record unless
the timing of the Controlled Composition in question as recorded in the
Master embodied on that Phonograph Record exceeds one (1) minute and thirty
(30) seconds in length;
(b) The term "Outside Selection" shall mean each Selection which is
not a Controlled Composition. You acknowledge that as an element of your
delivery to us of a Master, you are required to cause the issuance to us of
licenses to reproduce mechanically each Outside Selection in all Phonograph
Records sold in the United States or Canada on the Required Terms. The term
"Required Terms" shall mean mechanical royalty rates and otherwise on terms
that do not exceed the mechanical royalty rates and that otherwise are no
less favorable to us and our designees than those provided in the standard
mechanical licenses issued by The Harry Fox Agency, Inc. or any successor
for Phonograph Records sold in the United States and by C.M.R.R.A. or any
successor for Phonograph Records sold in Canada, except (i) the royalty
rate for the mechanical reproduction of Outside Selections on Phonograph
Records sold in the United States or Canada must not exceed the United
States Mechanical Rate or the Canadian Mechanical Rate above, as
applicable, and (ii) no royalties shall be payable for the mechanical
reproduction of Outside Selections on Phonograph Records sold in the United
States or Canada for which no Record royalties are payable under paragraph
9 above or otherwise. If for any reason you fail to cause the issuance to
us of a license for the mechanical reproduction of any Outside Selection as
and when required hereunder, we shall have the right, at our election and
without limiting our other rights or remedies in that event, to negotiate
and execute licenses for the mechanical reproduction of each such Outside
Selection on Phonograph Records distributed in the United States or Canada
on terms and conditions which are determined solely by us or our designees.
Solely for purposes of subparagraph (e) below, those licenses so procured
by us shall be deemed to be on terms no less favorable to us or our
designees than the Required Terms. Nothing contained in
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this subparagraph amends or modifies your obligation to deliver to us and
our designees licenses for the mechanical reproduction of all Selections
recorded in the Masters as a condition for the delivery to us of Masters or
waives the provisions of subparagraph 11(i) below;
(c) (i) Notwithstanding anything to the contrary contained herein, for
Net Sales in the United States, the maximum aggregate mechanical royalty
rate for all Selections, including Controlled Compositions, contained on a
Phonograph Record, regardless of the number of Selections contained
thereon, shall be the product of (A) the United States Controlled
Composition Mechanical Rate and (B) ten (10) for an Album, five (5) for an
EP, and two (2) for a Single and a Long-Play Single; and for Net Sales in
Canada, the maximum aggregate mechanical royalty rate for all Selections,
including Controlled Compositions, contained on a Phonograph Record,
regardless of the number of Selections contained thereon, shall be the
product of (A) the Canadian Controlled Composition Mechanical Rate and (B)
ten (10) for an Album, five (5) for an EP, and two (2) for a Single and a
Long-Play Single;
(ii) Notwithstanding the foregoing, if we release a Multiple Album
embodying solely Masters hereunder, then, solely with respect to that
Multiple Album, the maximum aggregate mechanical royalty rate for Net Sales
of that Multiple Album in the United States or Canada shall be the
otherwise applicable maximum set forth in subparagraph 11(c)(i) above for
Net Sales of Albums in the United States or Canada, as applicable,
multiplied by a fraction, the numerator of which is the Royalty Base Price
of that Multiple Album in the United States or Canada, as applicable, and
the denominator of which is the highest Royalty Base Price of an Album
which is not a Multiple Album in the configuration or format in question
released on our top-line label in the United States or Canada, as
applicable, as of the date of our initial release through normal retail
distribution channels in the United States or Canada, as applicable, of
that Multiple Album; and
(iii) Notwithstanding anything to the contrary contained herein,
royalties for the mechanical reproduction of any Selection in any
Phonograph Record distributed in the United States or Canada shall be
payable only on Net Sales of that Phonograph Record in question for which
in a Record royalty is payable hereunder pursuant to paragraph 9 above; and
(d) We shall account for and pay royalties for the mechanical
reproduction of Controlled Compositions in accordance with the provisions
of subparagraphs (a), (d), (e), and (g) of paragraph 10 above; and
(e) If for any reason we are required to pay royalties for the
mechanical reproduction of any particular Selection (including a Controlled
Composition) or for the mechanical reproduction of all Selections that are
mechanically reproduced in a particular Phonograph Record in excess of the
applicable amounts fixed in subparagraphs (a), (b) or (c) above, the
royalties payable by us for the mechanical reproduction of Controlled
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Compositions on Phonograph Records hereunder shall be reduced by an amount
equal to such excess. If that excess is greater than the amount of
royalties payable for the mechanical reproduction of Controlled
Compositions on the Phonograph Record in question, then upon our demand,
you shall pay to us an amount equal to the amount by which those excess
mechanical royalties exceed the royalties payable for the mechanical
reproduction of Controlled Compositions. In addition to all of our other
rights and remedies, we may deduct the amount of that excess from any and
all royalties or other monies payable to you under this Contract;
(f) Upon our request, you shall cause the issuance to us and our
designees a license to reproduce all Selections mechanically on Phonograph
Records hereunder distributed outside the United States and Canada on terms
no less favorable to us and our designees than those generally applicable
to Phonograph Record manufacturers in each country in question. The
obligation to account for and pay royalties for the mechanical reproduction
of Selections on sales of Phonograph Records outside of the United States
shall be that of our affiliates and licensees;
(g) 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 us and our designees the same
rights as you are required to grant to us and our designees pursuant to
this paragraph 11;
(h) You hereby grant to us and our designees, at no fee, royalty, or
other cost to us or our designees, the irrevocable, non-exclusive,
worldwide right in perpetuity to reproduce and publicly perform each
Controlled Composition in Audio-Visual Recordings, to distribute
Audio-Visual Records embodying those Audio-Visual Recordings, and otherwise
to exploit in any manner and through any media those Audio-Visual
Recordings. You shall, upon our request, cause the issuance to us and our
designees, at no fee, royalty, or other cost to us or our designees, the
irrevocable, non-exclusive, worldwide right in perpetuity to reproduce and
publicly perform each Selection which is not a Controlled Composition in
Audio-Visual Recordings, to distribute Audio-Visual Records embodying those
Audio-Visual Recordings, and otherwise to exploit in any manner or media
those Audio-Visual Recordings. If we or our designees shall pay any such
fee, royalty, or other cost, then you shall, upon our demand, pay us the
amount thereof, and we may, in addition to all of our other rights and
remedies, deduct that amount from any monies payable by us hereunder,
including without limitation, from those royalties payable pursuant to
paragraph 9 above in respect of the exploitation of Audio-Visual Recordings
in the United States or Canada;
(i) Any assignment, license or other agreement made with respect to
Controlled Compositions shall be subject to the terms hereof, and
(j) You grant to us and our designees the irrevocable right throughout
the world in perpetuity to (A) print and reproduce on the packaging of
Phonograph Records, at our election, the title and lyrics to each
Controlled Composition embodied in a Master and (B) digitally encode in a
Master or transmit together with the transmission of
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the Master the title and/or lyrics to each Controlled Composition embodied
in a Master, all without payment to you or any other person, firm or
corporation of any monies or other consideration in connection therewith.
You also shall cause to be granted to us and our designees the irrevocable
right throughout the world in perpetuity to (A) print and reproduce on the
packaging of Phonograph Records embodying Masters, at our election, the
title and lyrics to each Selection embodied in a Master that is not a
Controlled Composition and (B) digitally encode in a Master or transmit
together with the transmission of the Master the title and/or lyrics to
each Selection embodied in the Master which is not a Controlled
Composition, all without payment to you or any other person, firm or
corporation of any monies or other consideration in connection therewith.
If we are required to pay any monies to any person, firm or corporation for
the printing, reproduction, encoding, or transmission of the title or
lyrics of any Selection recorded in a Master as aforesaid, then you shall,
upon our demand, pay to us an amount equal to those monies paid by us in
connection therewith and we may, in addition to all of our other rights or
remedies, deduct that amount from any monies payable by us hereunder.
12. Audio-Visual Recordings.
(a) Upon our request, you shall appear for the making of Audio-Visual
Recordings embodying your performances on the following terms:
(i) We shall designate the Musical Compositions which shall be
embodied in the Audio-Visual Recordings, the producer and director of
the Audio-Visual Recordings, all other individuals rendering services
in connection with the production of the Audio-Visual Recordings, the
storyboard and script for the production of the Audio-Visual
Recordings, and the locations at and the dates on which the
Audio-Visual Recordings shall be produced (collectively referred to as
"Audio-Visual Production Elements");
(ii) We shall pay the Audio-Visual Production Costs of the
Audio-Visual Recordings in an amount not in excess of a budget
designated or approved by us in writing. "Audio-Visual Production
Costs" shall mean and include all minimum union scale payments made to
you in connection with the production of the Audio-Visual Recordings,
all payments which are made to any other individuals rendering
services in connection with the production of the Audio-Visual
Recordings, all other payments which are made pursuant to any
applicable law or regulation or the provisions of any collective
bargaining agreement between us and any union or guild (including,
without limitation, payroll taxes and payments to union pension and
welfare funds), all amounts paid or incurred 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, you) rendering services in connection with
the production of the Audio-Visual Recordings, together with all other
amounts paid or incurred in connection with the production and
delivery to us of the Audio-Visual Recordings. One hundred percent
(100%) of the Audio-Visual Production Costs shall be recoupable from
royalties payable under this Contract on
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the reproduction or other exploitation of all Audio-Visual Recordings
and Audio-Visual Records. Fifty percent (50%) of the aggregate
Audio-Visual Production Costs of each Audio- Visual Recording shall be
recoupable from royalties payable under this Contract on the
reproduction or other exploitation of Masters in Phonograph Records
reproducing sound alone;
(iii) The Audio-Visual Recordings shall be produced in accordance
with the rules and regulations of all labor unions and guilds having
jurisdiction over the production thereof;
(iv) You shall cooperate with us and our designees fully and to
perform to the best of your ability in connection with the production
of the Audio-Visual Recordings; and
(v) If the Audio-Visual Production Costs exceed the budget
approved by us in writing, you shall be solely responsible for and
shall promptly pay that excess. If, however, we pay any excess
Audio-Visual Production Costs, you shall pay to us, upon our demand,
an amount equal to that excess. If for any reason you delay the
commencement of or are not available for any scheduled appearance by
you relating to the production of the Audio-Visual Recordings, you
shall pay to us, upon our demand, an amount equal to the expenses or
charges paid or incurred by us by reason thereof. Notwithstanding
anything to the contrary contained herein, without limiting our other
rights and remedies, we may deduct the foregoing amounts from any
monies payable by us hereunder;
(b) Our rights in the Audio-Visual Recordings and our rights to use
your name and the name, likeness, and other identification and biographical
material concerning you are set forth in paragraphs 6 and 7 hereof, wherein
the terms "Master Recordings" and "Phonograph Records" include Audio-Visual
Recordings and Audio-Visual Records, respectively; and
(c) Audio-Visual Recordings shall not apply in fulfillment of your
Recording Commitment. We shall have no obligation, except as expressly
otherwise provided in this paragraph 12, to pay to you any monies in
connection with the production of Audio-Visual Recordings.
(d) We are under no obligation whatsoever to produce Videos hereunder.
Notwithstanding the foregoing, we agree to produce one (1) Video in
connection with each Album in fulfillment of the Recording Commitment,
provided that music videos remain a viable tool among major record
companies in the music industry for the marketing and promotion of Records
of the same genre as yours.
13. Warranties, Representations and Covenants. You hereby warrant,
represent, covenant and agree as follows:
(a) You have the right and power to enter into this Contract, to grant
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the rights granted by you to us hereunder, and to perform all of the terms
hereof. Without limiting the generality of the foregoing, no Musical
Composition, other Selection or any other material recorded by you shall be
subject to any re-recording or other restrictions;
(b) During the Term, you shall become and remain members in good
standing of any labor union or guilds with which we may at any time have an
agreement lawfully requiring your membership;
(c) All recording sessions for the Masters shall be 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;
(d) None of the following will violate or infringe upon the rights of
any person, firm or corporation, including, without limitation, contractual
rights, copyrights, rights of publicity and rights of privacy: any name or
other identification used by you; any Controlled Compositions; any other
Selections; and any materials, ideas, or other properties furnished or
designated by you and embodied or contained in or used in connection with
the Masters or the packaging of or the advertising for the Phonograph
Records embodying the Masters
(e) All recordings embodying your performances heretofore have been
released commercially in the United States on Phonograph Record;
(f) You shall not 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;
(g) Except as otherwise specifically provided herein, we shall have no
obligation hereunder or otherwise to pay any person, firm, or corporation
any amounts in connection with the exercise of any of our rights hereunder,
including, without limitation, our rights with respect to the recording or
exploitation of Master Recordings; and
(h) Without limiting the generality of anything contained in the
foregoing, you shall neither authorize the production of, nor shall you
produce for or deliver to us, any Master for which the recording method
known as "sampling" shall have been utilized to record in that Master any
sound or material created, owned or controlled by any third party.
14. Recording Restrictions.
(a) During the Term, you shall not enter into any agreement or make
any commitment which would interfere with your performance of any of the
terms hereof. Further, during the Term, you shall not perform for or render
services in connection with
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the recording of any Master Recordings for use or reproduction in
Phonograph Records by any person, firm, or corporation other than us. After
the Term, you shall not perform prior to the Restriction Date for any
person, firm or corporation other than us, for the purpose of making
Phonograph Records or Master Recordings, any Selection recorded hereunder
or under any other agreement between you and us or our affiliates. The term
"Restriction Date" shall mean the later of (i) the date five (5) years
subsequent to the last date on which a Master Recording embodying that
Selection was delivered to us and (ii) the date two (2) years subsequent to
the date on which the Term ended; and
(b) You shall not at any time manufacture, distribute, or sell or
authorize the manufacture, distribution, or sale by any person, firm, or
corporation other than us of Phonograph Records embodying (i) any
performance rendered by you during the Term or (ii) any performance
rendered by you after the Term of a Selection recorded hereunder if that
performance shall have been rendered prior to the Restriction Date
applicable to that Selection. Furthermore, you shall not 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 us of Phonograph Records embodying that performance.
Specifically, but without limiting the generality of the foregoing, if
during the Term you perform any Selection or if after the Term you perform
any Selection prior to the Restriction Date applicable thereto, you will
not 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 our request,
you shall promptly deliver to us a copy of the pertinent provisions of each
such contract and you shall cooperate fully and reasonably with us in any
controversy which may arise or litigation which may be instituted relating
to our rights pursuant to this paragraph.
15. Unique Services. You expressly acknowledge that your 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 of
any term hereof, we will be caused irreparable injury which cannot adequately be
compensated by money damages. Accordingly, we shall be entitled to injunctive
relief, in addition to any other rights or remedies which we may have, to
enforce the terms of this Contract.
16. Certain Remedies.
(a) We may, at our election, suspend the running of the Term and our
obligations hereunder upon written notice to you (i) if for any reason
whatsoever your voice or ability to perform as an instrumentalist shall
become materially impaired, (ii) if you shall refuse, neglect, fail, or be
unable to fulfill any of your obligations hereunder, or (iii) if as a
result of an Act of God, accident, fire, labor controversy, riot, civil
commotion, act of public enemy, law, enactment, rule, order, or act of any
government or governmental instrumentality, failure of technical
facilities, failure or delay of transportation facilities, illness or
incapacity of you, or others, or other cause of a similar or dissimilar
nature not reasonably within our control, we are hampered in the recording,
manufacture, distribution,
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or sale of Phonograph Records or our normal business operations become
commercially impractical. A suspension shall be for the duration of any
such event or contingency, and, unless we notify you to the contrary in
writing, the Contract Period during which that event or contingency shall
have commenced shall be automatically extended by a number of days equal to
the total number of days of the suspension, or such fewer number of days of
which we may advise you in writing. If any period of suspension arising
from events other than (i) the impairment of your voice or ability to
perform as an instrumentalist, (ii) your refusal, neglect, failure, or
inability to fulfill any of your obligations hereunder, or (iii) any other
event affecting a substantial portion of the United States recording
industry, shall exceed six (6) consecutive months in duration, you may give
to us notice at any time during the continuation of that period of
suspension after the date six (6) months after its commencement, of your
desire that we discontinue such period of suspension and that the Term be
terminated if we fail to do so ("Termination Request"). If we shall fail to
give to you notice of our discontinuance of that period of suspension
within ten (10) business days after our receipt of your Termination
Request, the Term shall expire and we shall have no obligations or
liabilities to you hereunder, except for our obligations with respect to
Masters delivered hereunder prior to that termination, if any.
Notwithstanding the foregoing, a suspension of the Term pursuant to this
subparagraph 16(a) shall not suspend our royalty accounting and payment
obligations hereunder unless the event causing that suspension materially
affects our ability to make payments or render statements. No suspension
shall in any manner suspend or otherwise impair our rights under this
Contract;
(b) If your voice or ability to perform as an instrumentalist shall
become impaired or if you shall refuse, neglect, fail, or be unable to
fulfill any of your obligations hereunder, including, without limitation,
your obligation to record for and deliver to us Masters within the time
periods set forth in paragraph 3 above, we may, without limiting our other
rights or remedies, terminate the Term upon written notice to you, in which
event we shall have no obligations or liabilities to you under this
Contract, except for our obligations, if any, with respect to Masters
recorded prior to that termination. If we so terminate the Term, you shall
pay us, on demand, an amount equal to any unrecouped advances hereunder,
other than any advances attributable to and paid in respect of a Required
Album theretofore delivered by you to us; and
(c) In addition to our other rights hereunder, we shall have the
right, at our election and for any reason, with or without cause, to
terminate the Term at any time by written notice to you. Additionally, we
shall have the right, at our election, with or without cause, to refuse to
permit you to fulfill your then-current Recording Commitment for any
Contract Period including, without limitation, by discontinuing recording
sessions for any Masters and ceasing the payment of Recording Costs for any
Masters. If we refuse to permit you to fulfill your minimum Recording
Commitment for any Contract Period, other than as a result of an event or
contingency referred to in subparagraph 17(a) above, we shall have no
obligations or liabilities to you in connection therewith unless within
forty five (45) days after our refusal you shall notify us of your desire
to fulfill your minimum Recording Commitment for that Contract Period and
within thirty (30) days after our receipt of that notice we shall fail to
advise you in writing that we shall permit you to fulfill your minimum
Recording Commitment for that Contract Period. If we shall fail to so
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advise you in writing that we shall permit you to fulfill your minimum
Recording Commitment for that Contract Period, the Term shall expire as of
the end of that thirty (30) day period and we shall have no obligations or
liabilities to you whatsoever in connection with our failure to permit you
to fulfill your Recording Commitment for that Contract Period. We shall,
however, pay to you promptly after the expiration of that thirty (30) day
period, as an advance recoupable from royalties hereunder or under any
other agreement between you and us or our affiliates, an amount equal to
the minimum union scale payments which would have been required to have
been paid to you for each Required Album for that Contract Period that we
did not permit you to record. For the purposes of the foregoing, an Album
shall be deemed to be comprised of eight (8) Masters.
17. Producer Provisions.
(a) You shall cause any and all producers of the Masters to execute a
Producer Declaration in the form attached hereto as Exhibit A prior to the
commencement of recording sessions for any Masters hereunder. Without
limiting the generality of anything set forth in paragraph 4 above, no
recording sessions shall be commenced nor shall we have any obligation to
pay to you any advances for the Masters pursuant to paragraph 8 above
unless and until you shall have entered into a binding agreement with any
and all producers of the applicable Masters and we shall have received an
executed Producer Declaration from any and all producers of the applicable
Masters;
(b) 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 producers or directors of Audio-Visual Recordings or to any
others rendering services in connection with the recording of the Masters
and the production of Audio-Visual Recordings or otherwise entitled to
compensation in respect of the exploitation of Masters or Audio-Visual
Recordings; and
(c) We may, but shall not be obligated to, enter into an agreement
with any producers of the Masters or any producer or director of any
Audio-Visual Recordings which provides for the payment by us, rather than
you, of royalties or other compensation payable to any such producer or
director; provided, however, that any such agreement shall contain standard
terms and conditions and we shall consult with you prior to our entering
into any such producer agreement, provided you are reasonably personally
available therefor. We shall consider in good faith your recommendations
with respect to such agreements, provided, however, that our decisions with
respect thereto shall be final and our failure to so consult with you in
accordance with this subparagraph 17(c) shall not constitute a breach of
the Contract. We may deduct any amounts payable by us to those producers or
directors of Masters or Audio-Visual Recordings from any monies payable by
us hereunder. Furthermore, for the purposes of the recoupment of any
advances or charges under this Contract, the royalty rates contained in
paragraph 9 with respect to those Masters and Audio-Visual Recordings shall
be deemed reduced by the amount of the applicable royalty rates with
respect to Masters and Audio-Visual Recordings payable by us to any such
producers or directors, Any advances payable by us to those producers or
directors which are not recouped by us from royalties payable to those
producers or
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directors may be recouped by us from any royalties or other sums payable
by us hereunder.
18. Definitions.
(a) The term "Album" shall mean a twelve (12) inch thirty-three and a
third (33-1/3) rpm long-playing vinyl-disc Phonograph Record of no fewer
than forty-five (45) minutes in playing time or its cassette tape or other
equivalent or substantial equivalent in any form or configuration, and,
where the context requires, Masters sufficient to constitute a twelve (12)
inch thirty-three and a third (33-1/3) long-playing vinyl-disc Phonograph
Record of no fewer than forty-five (45) minutes in playing time or its tape
or other equivalent or substantial equivalent in any form or configuration.
The maximum playing time of an Album shall not exceed the maximum number of
minutes capable of being reproduced pursuant to the technological
specifications of the format or configuration concerned, which shall be
designated by us in our reasonable good faith discretion;
(b) The term "Audio-Visual Record" shall mean a Phonograph Record
embodying visual images;
(c) The term "Audio-Visual Recording" shall mean a Master Recording
embodying visual images;
(d) (i) The term "Budget Audio-Visual Record" shall mean an
Audio-Visual Record which bears a Royalty Base Price in the country in
question which is sixty-six and two-thirds (66-2/3%) percent or less of the
Royalty Base Price in that country of top-line Audio-Visual Records on
which recordings of the majority of our artists are initially released in
that country;
(ii) The term "Budget Record" shall mean a Phonograph Record which
bears a Royalty Base Price in the country in question which is sixty-six
and two- thirds (66-2/3%) percent or less of the Royalty Base Price in that
country of top-line Phonograph Records on which recordings of the majority
of our artists are initially released in that country;
(e) The term "Compact Disc" shall mean a Digital Record in any
configuration (e.g., Album, Single, EP) in disc form primarily reproducing
sound (but not together with visual images), the signals of which are read
and transmitted from that disc by means of laser;
(f) The term "Controlled Composition" shall mean a Musical Composition
or other Selection, written or composed by you, in whole or in part, 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 an indirect interest;
(g) The terms "Conventional Phonograph Record," "Conventional cassette
tapes," "Conventional vinyl discs" and "Conventional Album" shall refer to
black
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vinyl discs or analog tape cassettes of customary quality;
(h) The term "Digital Records" shall mean Records in any configuration
(e.g., Album, Single, EP), the signals of which are encoded and decoded by
digital technology, whether now known or hereafter devised, as opposed to
analog technology, and shall include, without limitation, Compact Discs,
digital audio tapes, mini discs and digital compact cassettes.
Notwithstanding the foregoing, the term "Digital Records" shall not mean a
Record exploited by means of direct transmission (whether digital or
otherwise) via satellite, cable or other direct transmission to the
consumer over wire or through the air, which shall constitute a New Record
hereunder for all purposes;
(i) The term "delivery to us" or words of similar connotation used in
connection with Master Recordings or Masters shall mean delivery to our
Production Manager at our offices in Philadelphia, Pennsylvania of all of
the following: a two-track sequenced, equalized, fully-mixed and mastered
digital audio tape and/or U-matic 1630 tape in proper form for the
production of the parts necessary to manufacture Phonograph Records
therefrom and all consents, approvals, copy information, credits,
mechanical licenses for all Selections recorded in those Master Recordings
or Masters and other material and documents required by us to release
Phonograph Records embodying those Master Recordings or Masters and to
manufacture album covers or other packaging therefor (including, without
limitation, Artwork). Our election to pay to you any monies which were
otherwise required to have been paid upon or promptly after your delivery
to us of Masters or our election to release any Phonograph Record derived
from any Master shall not be deemed to be an acknowledgment by us that
delivery to us of that Master or Masters has been completed in accordance
with the provisions of this subparagraph (i). Further, in either event, we
shall not be deemed to have waived our right to require your complete and
proper performance thereafter of your obligation to deliver to us any
Masters or any of our remedies for your failure to do so in accordance with
the provisions hereof;
(j) The term "EP" shall mean a twelve (12) inch thirty-three and a
third (33-1/3) rpm or forty-five (45) rpm vinyl-disc Phonograph Record, or
its cassette tape or other equivalent or substantial equivalent in any form
or configuration, embodying no fewer than four (4) Musical Compositions and
no more than seven (7) Musical Compositions;
(k) The term "Long-Play Single" shall mean a twelve (12) inch
thirty-three and a third (33-1/3) rpm or forty-five (45) rpm vinyl-disc
Phonograph Record, or its cassette tape equivalent or other equivalent or
substantial equivalent in any form or configuration, embodying one (1) or
more recordings of no more than three (3) different Musical Compositions;
(1) The term "Master Recording" shall mean every form of recording
(whether now known or unknown), embodying sound alone, or sound accompanied
by visual images, which may be used in the recording, production, or
manufacture of Phonograph Records;
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(m) The term "Master" shall mean a Master Recording embodying your
performances recorded during the Term;
(n) (i) The term "Mid-Price Audio-Visual Record" shall mean an
Audio-Visual Record bearing a Royalty Base Price in the country in question
in excess of sixty-six and two-thirds (66-2/3%) percent and less than
eighty (80%) percent of the Royalty Base Price in that country of top-line
Audio-Visual Records on which recordings of the majority of our artists are
initially released in that country;
(ii) The term "Mid-Price Record" shall mean a Phonograph Record
bearing a Royalty Base Price in the country in question in excess of
sixty-six and two-thirds (66-2/3%) percent and less than eighty (80%)
percent of the Royalty Base Price in that country of top-line Phonograph
Records on which recordings of the majority of our artists are initially
released in that country;
(o) The term "Multiple Album" shall mean a single package containing
two (2) or more Albums, or their cassette tape or other equivalent or
substantial equivalent in any form or configuration, which is sold as a
single unit, and, where the context requires, Master Recordings sufficient
to constitute a single package containing two (2) or more Albums, or their
tape or other equivalent or substantial equivalent in any form or
configuration, which is sold as a single unit;
(p) The terms "Musical Composition" and "Composition" shall mean a
single musical composition and, for the purposes of computing mechanical
royalties hereunder, shall include a medley,
(q) (i) With respect to Masters other than Audio-Visual Recordings,
the term "Net Receipts" shall mean the flat-fee, if specifically
attributable solely to one (1) or more Masters, or the royalty, as the case
may be, received by us from a person, firm or corporation from the
exploitation by that person, firm or corporation of rights in those
Masters, less all costs paid or incurred by us in connection with the
exploitation of those rights and the collection of those monies, less all
taxes and adjustments and less all royalties or other sums payable by us to
any person, firm or corporation in connection with the exploitation of
those rights, including, without limitation, royalties for the mechanical
reproduction of the Selections embodied in those Masters, but excluding
royalties or other sums payable to producers of those Masters, which shall
be borne solely by you; and
(ii) With respect to Audio-Visual Recordings, the term "Net
Receipts" shall mean an amount equal to the flat-fee, if specifically
attributable solely to one (1) or more Audio-Visual Recordings, or the
royalty, as the case may be, received by us from a person, firm or
corporation from the exploitation by that person, firm or corporation of
rights in those Audio-Visual Recordings, less twenty percent (20%) of those
monies as a distribution fee, less all costs paid or incurred by us in
connection with the exploitation of those rights and the collection of
those monies and less all taxes and adjustments and less all royalties or
other sums
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payable by us to any person, firm or corporation in connection with the
exploitation of those rights, including, without limitation, royalties for
the mechanical reproduction of the Selections embodied in those
Audio-Visual Recordings, but excluding royalties or other sums payable to
producers of the Masters embodied in those Audio-Visual Recordings and
producers or directors of those Audio-Visual Recordings, which shall be
borne solely by you;
(r) The term "Net Sales" shall mean ninety-percent (90%) of gross
sales for which final payment has been received by us in United States
Dollars in the United States, after deducting from gross sales returns,
credits, and reserves against anticipated returns and credits;
(s) The term "Net Sales through Normal Retail Distribution Channels"
shall mean Net Sales of Phonograph Records hereunder through our principal
distributor in the country in question for resale through record or other
retail stores for which a Record royalty is payable hereunder after the
retention of reserves (and, without limiting the generality of the
foregoing, shall exclude sales or distributions referred to in paragraph
9(b) above);
(t) The term "New Record" shall mean a Phonograph Record in any
software medium in which recorded music is not in general commercial
distribution in the United States as of January 1, 1999, including, without
limitation, the sale of Phonograph Records (or other exploitation of
Masters) through the telephone, satellite, cable or other direct
transmissions to the consumer over wire or through the air (as
distinguished from radio or television advertised sales of Phonograph
Records described in subparagraph 9(b)(i) above);
(u) 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, other pre-recorded tapes, or any digital copy,
including, without limitation, so-called "temporary copy";
(v) The term "Royalty Base Price" shall mean the following amounts for
the following Phonograph Records:
(i) (A) With respect to Phonograph Records (other than
Audio-Visual Records) sold in the United States or Canada, the SRLP
except as set forth below; and
(B) With respect to royalties payable on Net Sales of
Phonograph Records in the United States or Canada for which the
Royalty Base Price is the SRLP, we shall have the right, at any time,
at our election, to calculate royalties hereunder on the basis of our
principal distributor's price (before consideration of any discounts
resulting from the distribution of free goods), from time to time, to
its customers in the United States of
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Phonograph Records, in lieu of the SRLP of those Phonograph Records,
multiplied by an "uplift." As used in the immediately-preceding
sentence, the term "our principal distributor's price" shall mean the
lowest wholesale price paid by the largest category of customers to
our principal distributor in the United States during the relevant
semi-annual accounting period. If we elect to do so, then we shall
calculate that uplift" as a fraction, the numerator of which is the
SRLP of a Comparable Phonograph Record immediately prior to our
discontinuance of retail-based calculations and the denominator of
which is our principal distributor's price (before consideration of
any discounts resulting from the distribution of free goods) to its
customers in the United States of a Comparable Phonograph Record
immediately prior to our discontinuance of retail-based calculations.
The application of the foregoing provisions of this subparagraph shall
not result in a reduction in the amount of royalties otherwise payable
to you hereunder on a configuration-by-configuration basis immediately
prior to our discontinuance of retail-based calculations. For purposes
of this subparagraph, the term "Comparable Phonograph Record" shall
mean a Phonograph Record of the same configuration, with the same
packaging, and in the same price category as the Phonograph Record in
question; and
(ii) With respect to Phonograph Records (other than Audio-Visual
Records) sold outside of the United States and Canada:
(A) If an SRLP is established or utilized by our
licensee (whether or not affiliated with us) in a particular
country in accounting to us, then that particular SRLP
established or utilized by our licensees shall apply to
Phonograph Records hereunder;
(B) If an SRLP is not established or utilized by our
licensee (whether or not affiliated with us) in a particular
country in accounting to us on sales of Phonograph Records,
then, at our election, (1) the price upon which mechanical
royalties are generally computed and paid by major record
companies (including, without limitation, our then-current
principal distributor) in the country in question pursuant to
the then-current agreement between major record companies and
the mechanical reproduction rights society in that country or
(2) an amount computed by multiplying the lesser of (aa) that
percentage utilized by our affiliate or licensee in computing
a retail related price or constructed price on which
royalties are paid to us and (bb) one hundred twenty-six
percent (126%), by the lowest of (aa) the so-called
"published price to dealers," (bb) the lowest wholesale price
paid to our or our affiliate's or licensee's principal
distributor in the country in question by the largest
category of customers during the relevant semiannual
accounting period and (cc) the wholesale price which our
licensee (whether or not affiliated with us) in a particular
country uses in accounting to us for royalties.
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(iii) With respect to Audio-Visual Records sold in any country of
the world, an amount equal to the monies actually received by us in
the United States (or credited to us in final reduction of an advance
previously received by us in the United States) from the sale of those
Audio-Visual Records (rather than their actual SRLP, wholesale price,
published price to dealers or any other price), after deduction of a
distribution fee of twenty percent (20%) of those monies; and
(iv) There shall be deducted from the Royalty Base Price an amount
equal to any excise, sales, value added or comparable or similar taxes
which are included therein;
(w) The term "Selection" shall mean a Musical Composition, poem,
dramatic work, comedy routine, or other verbal expression;
(x) The term "Single" shall mean a seven (7) inch vinyl-disc
Phonograph Record or its tape or other equivalent or substantial equivalent
in any form or configuration; and
(y) Except as otherwise herein provided, the term "SRLP" shall mean
those suggested retail list prices established by us or our affiliates or
licensees from time to time for Phonograph Records in a particular
configuration which shall be determined from time to time with reference to
the relevant wholesale price in a manner that shall be applied consistently
to a majority of our (or our licensees' or affiliates') then-current
recording artists. With respect to New Records that are distributed by
telephone, satellite, cable or other direct transmissions over wire or
through the air, the term "SRLP" shall mean either those suggested retail
list prices therefor, if any, established by us or our affiliates in
accordance with the terms of the preceding sentence or those retail list
prices charged to the ultimate consumer therefor, excluding any shipping
and handling charges in connection therewith.
19. Indemnity. You hereby indemnify, save, and hold us harmless from any
and all damages, liabilities, costs, losses and expenses (including legal costs
and attorneys' fees) arising out of or connected with any claim, demand or
action by us or by a third party which is inconsistent with any of the
warranties, representations or covenants made by you in this Contract. You shall
reimburse us, on demand, for any payment made by us 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, we may
withhold, at our election, payment of any monies otherwise payable to you
hereunder or under any other agreement between you and us or our affiliates in
an amount which does not exceed your potential liability to us pursuant to this
paragraph.
20. Assignment. We shall have the right, at our election to assign this
Contract or any of our rights hereunder, in whole or in part, or to delegate any
of our obligations hereunder, in whole or in part, to any person, firm or
corporation. You shall not have the right to assign this Contract or any of your
rights or to delegate any of your obligations hereunder.
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21. Notices. 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 us hereunder
shall be addressed to us at the address set forth on page 1 hereof or at such
other address as we shall designate in writing from time to time. All notices
shall be in writing and shall either be served by personal delivery, certified
mail, return receipt requested, or facsimile transmission (with a copy sent
concurrently by certified mail, return receipt requested), all charges prepaid,
except that statements and payments may be sent by regular mail. Notices to us
must be sent to the attention of our Senior Vice President, Business & Legal
Affairs. Except as otherwise provided herein, notices shall be deemed given when
personally delivered, mailed as aforesaid, or transmitted by facsimile (with a
concurrent copy mailed as aforesaid), all charges prepaid, except that notices
of change of address shall be effective only after actual receipt. A copy of
each notice to us shall be sent simultaneously to Law Office of Brad A. Rubens,
LLC, 425 North 20th Street, Philadelphia, PA 19130, Attention: Brad Rubens.
22. Miscellaneous
(a) This Contract sets forth your and our entire understanding
relating to its subject matter. No modification, amendment, waiver,
termination or discharge of this Contract or of any of its terms shall be
binding upon either of us unless confirmed by a document signed by you and
by a duly authorized officer of ours. No waiver by you or us of any term of
this Contract or of any default hereunder shall affect your or our
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) We shall not be deemed to be in breach of any of our obligations
hereunder unless and until you shall have given us specific written notice
by certified or registered mail, return receipt requested, describing in
detail the breach and we shall have failed to cure that breach within a
reasonable period of time; and
(c) Our payment obligations under this Contract are conditioned upon
your full and faithful performance of the terms hereof;
(d) Wherever your approval or consent is required hereunder, that
approval or consent shall not be unreasonably withheld. We may require you
to formally give or withhold approval or consent by giving you notice of
our 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 us written notice of your approval or disapproval or of your consent
or non-consent within five (5) days after our 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 us notice as aforesaid
shall be deemed to be consent or approval, as the case may be, with respect
to the matter submitted;
(e) Nothing herein contained shall constitute a partnership, joint
venture, or fiduciary relationship between you and us. Except as otherwise
expressly provided herein, you are performing your obligations hereunder as
independent
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contractors. Neither party hereto shall hold itself out contrary to the
terms of this subparagraph 22(e) and neither you nor we shall become liable
for any representation, act or omission of the other contrary to the
provisions hereof;
(f) This Contract shall not be deemed to give any right or remedy to
any third party whatsoever unless that right or remedy is specifically
granted by us in writing to that third party;
(g) The provisions of any applicable collective bargaining agreement
between us and any labor union or guild which are required by the terms of
that agreement to be included in this Contract shall be deemed incorporated
herein as if those provisions were expressly set forth in this Contract;
(h) In the event of any action, suit, or proceeding arising from or
based upon this Contract brought by either party hereto against the other,
the prevailing party shall be entitled to recover from the other its
attorneys' fees in connection therewith in addition to the costs of that
action, suit, or proceeding;
(i) 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;
(j) THIS CONTRACT HAS BEEN ENTERED INTO IN THE COMMONWEALTH OF
PENNSYLVANIA AND ITS VALIDITY, CONSTRUCTION, INTERPRETATION AND LEGAL
EFFECT SHALL BE GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA
APPLICABLE TO CONTRACTS ENTERED INTO AND PERFORMED ENTIRELY WITHIN THE
COMMONWEALTH OF PENNSYLVANIA (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS
PRINCIPLES UNDER PENNSYLVANIA LAW). THE VENUE FOR ANY ACTION, SUIT OR
PROCEEDING ARISING FROM OR BASED UPON THIS CONTRACT SHALL BE THE
APPROPRIATE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF PHILADELPHIA
IN THE COMMONWEALTH OF PENNSYLVANIA. ACCORDINGLY, YOU AND WE AGREE THAT ANY
ACTION, SUIT OR PROCEEDING ARISING FROM OR BASED UPON THIS CONTRACT SHALL
BE COMMENCED IN AND DETERMINED BY THOSE APPROPRIATE STATES AND FEDERAL
COURTS LOCATED IN THE COUNTY OF PHILADELPHIA IN THE COMMONWEALTH OF
PENNSYLVANIA. IN CONNECTION WITH THE FOREGOING, YOU AND WE EACH AGREE TO
SUBMIT TO AND BE BOUND BY THE JURISDICTION OF THE APPROPRIATE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF PHILADELPHIA IN THE COMMONWEALTH OF
PENNSYLVANIA;
(k) This Contract shall not become effective until signed by you and
countersigned by a duly authorized officer of ours;
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(1) The paragraph headings herein are solely for the purpose of
convenience and shall be disregarded completely in the interpretation of
this Contract or any of its terms;
(m) We may at any time during the Term obtain, at our cost, insurance
on you. We or our designees shall be the sole beneficiary of that insurance
and neither you, nor any person, firm or corporation claiming rights
through or from you shall have any rights in that insurance. You shall
submit to such physical examinations and to complete and deliver such forms
as we may reasonably require and otherwise to cooperate with us fully for
the purpose of enabling us to secure that insurance;
(n) Upon our request, you shall render your services at such times and
places as we may reasonably designate for the purpose of assisting us in
the marketing, advertising and promotion of Phonograph Records hereunder.
Among those services are engaging in interviews, participating in press
conferences, posing at photography sessions and appearing on television and
radio shows. Promptly after your submission to us of invoices or other
suitable documentation therefor, we shall pay to you or reimburse you for
the reasonable costs of travel and accommodations which are actually paid
or incurred by you in connection with your services under this subparagraph
22(n), but you shall not pay or incur any costs or expenses in connection
with your services under this subparagraph 22(n) which are to be paid or
reimbursed by us unless you and we mutually agree in writing on the nature
and extent of those costs and expenses. If we pay or incur any costs in
connection with your services pursuant to this subparagraph 22(n)
("Promotional Services Costs"), those Promotional Services Costs shall not
be recoupable from royalties earned by you hereunder. If, however, any
third party pays to you any fee or other consideration for or in connection
with your services pursuant to this subparagraph 22(n) (such as, but not
limited to, a television appearance fee) and we pay or incur any
Promotional Services Costs in connection therewith, then you shall pay to
us all such fees and other consideration to the extent of our Promotional
Services Costs in connection therewith. If you fail for any reason to pay
to us those fees to the extent of our Promotional Services Costs, then, at
our election, the amount of all such fees received by you from third
parties in connection with your services pursuant to this subparagraph
22(n) in an amount equal to our Promotional Services Costs shall be deemed
to be advances recoupable from any and all monies payable to you pursuant
to this Contract;
(o) You shall not render any services to or authorize or permit your
name or likeness or any biographical material concerning you to be used in
any manner by any person, firm or corporation in the advertising, promoting
or marketing of blank magnetic recording tape, digital audio tape or any
other product or device intended to be sold, whether now known or hereafter
developed, which may be used for the fixation of sound alone or sound
together with visual images;
(p) You acknowledge and agree that you have been represented by
independent legal counsel or have had the unrestricted opportunity to be
represented by independent legal counsel of your own choice for purposes of
advising you in connection
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with the negotiation and execution of this Contract. Additionally, you
acknowledge and agree that either you or your independent legal counsel
have had the opportunity to investigate and inquire about all of the
relevant facts and circumstances in connection with your entering into and
executing this Contract. If you have not been represented by independent
legal counsel of your own choice for purposes of advising you in connection
with the negotiation and execution of this Contract, you acknowledge and
agree that your failure to be represented by independent legal counsel in
connection with your negotiation and execution of this Contract was
determined solely by you, without any interference by us or any person,
firm or corporation related to us;
(q) The provisions of the Immigration Reform and Control Act ("IRCA")
are mandatory. You agree to complete the Immigration and Naturalization
Service Form 1-9 ("Employment Eligibility Verification Form") no later than
concurrently with your execution of this Contract. You expressly
acknowledge and agree that any and all payments to or on behalf of you
under this Contract are conditioned upon your delivery to us of a completed
Employment Eligibility Verification Form. This provision shall not in any
way modify or alter the fact that you are performing your obligations
hereunder as an independent contractor, except as otherwise expressly
provided in this Contract,
(r) Nothing contained in the Contract or otherwise shall be deemed to
authorize or permit you to pay or incur (and you shall not pay or incur)
any cost or expenses without our prior written consent, which consent we
may withhold in our sole discretion; and
(s) Unless otherwise specified herein or unless the context otherwise
clearly requires, the masculine gender used herein includes the feminine
and neuter genders, and the grammatically plural form of any term defined
in the singular form hereunder shall also be the plural form of such
defined term, and the grammatically singular form of any term defined in
the plural form hereunder shall also be the singular form of such defined
term.
23. Sampling and Sampled Master. The following terms have the following
meanings: The term "Sampling" refers to the use and reproduction of preexisting
music material in a Master Recording intended to be a "Master", the term "Other
Material" refers to the pre-existing musical material which is used or embodied
in a Master Recording intended to be a "Master"; and the term "Sampled Master"
refers to a Master Recording which is delivered to us as a "Master" subject to
this Contract embodying Other Material. You warrant, represent, covenant and
agree as follows: concurrently with your delivery to us of any Master Recording
as a "Master" subject to this Contract, you shall notify us in writing of any
Sampling of Other Material in that Master Recording, and you shall notify us in
writing of the names and addresses of the recording artist(s), recording
companies, songwriters and publishers who have any right, title or interest in
and to the Other Material embodied in that Master Recording intended to be
delivered to us as a "Master" subject to this Contract as a result of that
Sampling, no Sampled Master shall violate or infringe on the rights of any other
person, firm or corporation, including, without limitation, the copyrights owned
or controlled by any other person, firm or corporation; as between you, on the
one part, and us, on the other part, you shall be solely responsible for and
shall account for and pay to the
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persons, firms or corporations that own or control Other Material all monies to
which those other person, firms or corporations are entitled to as a result of
the Sampling of any Other Material in Sampled Masters subject to this Contract;
and, as between you and us, you shall be solely responsible for obtaining all
consents and licenses necessary or desirable in connection with the use and
reproduction and licensing the use and reproduction of Other Material in Sampled
Masters. No royalties, advances or other money shall be earned by or payable to
you hereunder in connection with any Sampled Master and no Sampled Masters shall
be deemed to be delivered to us in fulfillment of your Recording Commitment
unless and until we obtain documentation reasonably satisfactory to us of the
foregoing.
In consideration of the mutual promises contained herein, and intending
to be legally bound hereby, the parties hereto have signed this Agreement on the
date and year first above written.
Very truly yours,
ANTRA MUSIC GROUP, INC.
By: /s/ Joseph M. Marrone, CEO
---------------------------
AGREED AND ACCEPTED:
By: /s/ Jeffrey Brown
----------------------------
Jeffrey Brown, p/k/a "Crush"
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PRODUCER DECLARATION
--------------------
I, the undersigned, declare that I have read and understand
those relevant portions of the agreement between Antra Music Group, Inc.
("Antra") and Jeffrey Brown (professionally known as "Crush" and referred to
below as "Artist") dated as of October 1, 1999 ("Artist Agreement") that pertain
to my record production endeavors.
I hereby certify that I have produced or will have produced
certain master recordings embodying Artist's featured performance ("Masters")
pursuant to an agreement between Artist and me ("Producer Agreement") which
provides for valuable consideration to be paid to me. As part of my material
obligations pursuant to the Producer Agreement and for the express and direct
benefit of Antra, I hereby:
A. Grant to Antra the perpetual right to use and publish and to permit
others to use and publish my name, signature, approved likeness, and
approved biographical material concerning me for advertising and trade
purposes in connection with the sale and exploitation of masters and
records manufactured from masters recorded pursuant to the Artist
Agreement, or to refrain therefrom.
B. Agree to look solely to Artist for the payment of any advances, fees
and/or royalties, as the case may be, and will not assert any claim in
this regard against Antra or attempt to prevent the manufacture, sale
or distribution of phonograph records manufactured from Masters
produced under the terms and conditions of the Artist Agreement and the
Producer Agreement. Any payments that I receive from Antra in
connection with the exploitation of Masters or my services pursuant to
Producer Agreement shall have been made solely as an accommodation to
Artist and nothing contained herein, in the Producer Agreement or in
the Artist Agreement shall constitute me a beneficiary of or party to
the Artist Agreement or any other agreement between Antra and Artist.
C. Acknowledge and agree that each Master recorded under the Producer
Agreement embodying the results and proceeds of my services (i) is
prepared within the scope of the Artist's engagement of my personal
services and is a "work made for hire" or (ii) is prepared as part of a
long-playing phonograph record (or its substantial equivalent) which
constitutes a work specially ordered
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by Artist or Antra for use as a contribution to a collective work and
shall be considered a "work made for hire." I further acknowledge that
Antra is the exclusive owner of copyright with respect to each such
Master and any "sound recording" or "phonorecord" or "copy"
manufactured therefrom (individually and collectively called the
"Work"), and that Antra has the right to exercise all rights of the
copyright proprietor with respect thereto, including, but not limited
to, all exclusive right specified in 17 U.S.C. ss. 106 and the
exclusive right to register copyright in the name of Antra.
D. Notwithstanding the provisions of paragraph C above, I agree that to
the extent, if any, that I may be deemed an "author" of any Work, I
hereby irrevocably transfer, grant, convey and assign to Antra,
exclusively, perpetually and throughout the universe, all exclusive
right, title and interest in and to such Work, including, but not
limited to, all exclusive right of the copyright owner as specified in
17 U.S.C.ss. 106. I hereby grant to Antra a power of attorney,
irrevocable and coupled with an interest, to execute for me and in my
name, all documents and instruments necessary or appropriate to
effectuate the intents and purposes of this paragraph D and to
accomplish, evidence and perfect the rights granted to Antra pursuant
to this paragraph D including but not limited to documents to apply for
and obtain all registration of copyrights in and to any such Work, and
documents to assign such copyrights to Antra.
E. Agree that I shall not produce or co-produce, prior to the date three
(3) years after the Master shall have been delivered to Antra in
accordance with the provisions of the Artist Agreement, any recording
for any person, firm or corporation other than Antra which embodies, in
whole or in part, any of the selections recorded in the Masters.
__________________________
SS#:__________________________
Address:__________________________
__________________________
__________________________
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EXCLUSIVE ARTIST RECORDING AGREEMENT
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AGREEMENT, made and entered into this 1st day of July, 1999, by and between
the parties, ANTRA MUSIC GROUP, INC., d/b/a ANTRA MUSIC GROUP, of 1515 Locust
Street, Philadelphia, Pennsylvania, 19102 (hereinafter referred to as "Company")
and IRINA PEREZ p/k/a "MING XIA" a/k/a "AGENT 99", and BOOKER TUCKER p/k/a
"MISTA BOOKA", and JOSEPH DAVIS p/k/a "JD REVENGE", and CHENJERAI KUMANYIKA
p/k/a "HYPNO" a/k/a "MISTA CHENJERAI", and JERELL SPRUILL p/k/a "GEE" a/k/a
"KILLAHAHA" a/k/a "WATER WATER", individually and collectively, and collectively
professionally known as "SPOOKS" (hereinafter referred to collectively as
"Artist"), c/o Osse & Woods, P.C., 60 E. 42nd St., NY NY 10165, Attn: Reginald
J. Osse, Esq.
WHEREAS Company is in the business of exploiting and dealing in phonograph
records and derivatives thereof; and,
WHEREAS Company wishes to produce or cause the production of certain
recordings embodying Artist's performances, as more particularly set forth
herein; and,
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WHEREAS Artist wishes to have Company produce or cause the production and
distribution of certain recordings, as more particularly set forth below:
NOW THEREFORE, in consideration of the representations and warranties, and
the mutual promises hereinafter set forth, and for such other good
consideration, receipt of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions.
For the purpose of this Agreement, the following terms shall mean:
(a) "Master" - the equivalent of a 7 inch, 45 rpm, single-sided
recording embodying the recorded performances of the Artist and intended for use
in the manufacture and sale of phonograph records.
(b) "Single" - the equivalent of a 7 inch, 45 rpm, or a 12 inch, 33 1/3
rpm double-sided phonograph record embodying thereon at least two (2) Masters.
(c) "EP" - a record embodying thereon between five (5) and eight (8)
Masters, provided, however, that in the event that more than one (1) of such
Masters embody the same musical composition, such record shall be deemed to be a
12 inch single.
(d) "LP" - the equivalent of as 12 inch, 33 1/3 rpm, double-sided long
playing phonograph record embodying thereon the equivalent of not less than nine
(9) Masters nor less than thirty-five (35) minutes.
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(e) "Records", "phonograph records", "recordings", and "derivatives"
mean and include all forms of recording and reproductions, now known or which
may hereafter become known, manufactured or sold primarily for home and/or
jukebox use and/or use on or in means of transportation, including, without
limiting the generality of the foregoing, magnetic recording tape, film,
electronic video recordings and any other medium or device for the reproduction
of artistic performances (whether such artistic performances are of a type now
known or hereafter devised) manufactured or sold for home use and/or jukebox use
on or in means of transportation, whether embodying: (i) sound alone; or, (ii)
sound synchronized with visual images, e.g. "sight and sound devices".
(f) "Retail list price" means the retail list price or applicable list
price in, at Company's election, the country of sale or manufacture (exclusive
of all taxes, discounts, duties and packaging).
(g) "Composition" means a musical composition or medley consisting of
words or music, whether in the form of instrumental and/or vocal music contained
on a Master. 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.
(h) "Recording Costs" means all costs incurred for and with respect to
the production of Masters embodying Artist's performances including, but not
limited to, sums payable to the individual producer(s) for the production of
Masters embodying Artist's performances. Recording costs include, without
limitation, union scale, the costs of all instruments, musicians, vocalists,
conductors, arrangers, orchestrators, copyists, etc., payments to a trustee or
fund based on wages to the extent required by any agreement between Company and
any labor organization or trustee, all studio costs, tape, editing, mixing,
mastering, engineering, travel, per diems, production fees, rehearsal halls,
costs of non-studio facilities and equipment, dubbing, transportation of
instruments and other costs and expenses incurred in producing the Masters
hereunder, from time to time, and all other costs which are customarily
recognized as Recording Costs in the Phonograph record industry.
(i) "Territory" means the universe.
(j) "Controlled Composition" means a Composition which is written or
composed, in whole or in part, by Artist or any individual producer of Artist's
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recordings hereunder, or owned or controlled directly or indirectly by Artist or
such individual producers, or by any person, firm or corporation associated or
affiliated with Artist or such individual producers.
(k) "Recorded Composition" means a Controlled Composition which is
recorded by Artist hereunder or contained on any Master recording subject to
this agreement.
(l) "Mid-priced record" means a record which bears a suggested retail
list price in the applicable country of the Territory of at least Two Dollars
($2.00) but not more than Three Dollars ($3. 00) (or the equivalent in the
applicable foreign currency) less than the suggested retail list price of
Company's or Company's licensee's, as applicable, then-current newly-released
top-line records in the same configuration or format. Notwithstanding the
foregoing, in respect of Company's commercial exploitation, if any, of
audio-visual Program hereunder, the term mid-priced record shall mean an
audio-visual Program which bears a suggested retail list price in the applicable
country of the Territory of at least sixty percent (60%) but not more than
eighty-five percent (85%) of Company's or Company's licensee's, as applicable,
suggested retail list price of the applicable audiovisual Program full priced
as initially released in the applicable country of the Territory in the same
configuration or format.
(m) "budget record" means a record which bears a suggested retail list
price in the applicable country of the Territory which is more than Three
Dollars (03.00) (or the equivalent in the applicable foreign currency) less than
the suggested retail list price of Company's or Company's licensee's, as
applicable, then-current newly-released top-line records in the same
configuration or format. Notwithstanding the foregoing, in respect of Company's
commercial exploitation, if any, of audiovisual Programs hereunder, the term
"budget record" shall mean an audio visual device which bears a suggested retail
list price in the applicable country of the Territory of less than sixty percent
(60%) of Company's or Company's licensee's, as applicable, suggested retail list
price of the applicable audio-visual device full priced as initially released in
the applicable country of the Territory in the same configuration or format.
2. Exclusive Recording Services. Company hereby engages Artist to perform
as a recording artist exclusively for Company pursuant to the terms and
conditions of this agreement and to render such services as Company may require
in connection with the recording, production and exploitation of phonograph
records and to furnish the services of such person(s) approved by Company who
shall perform as the individual producer(s) of Masters hereunder and who shall
perform all functions, responsibilities and services requested by Company.
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Artist hereby accepts such engagement and agrees to furnish such services
exclusively in the Territory to Company for a period of one (1) year commencing
on the date hereof ("Initial Period") and any exercised option periods
hereinafter set forth. The Initial Period as the same may be extended is
hereinafter called the "Term". Artist hereby irrevocably grants to Company the
option to extend the Initial Period for Five (5) further consecutive renewal
periods of one (1) year each. Each option shall be deemed automatically
exercised, unless Company sends written notice to the contrary to Artist at any
time prior to the date that the Term would otherwise expire. Each year of the
Term shall sometimes hereinafter be referred to as a "Contract Year".
3. Recording Obligation.
(a) During the Term, Artist warrants that Artist shall perform for the
purpose of making phonograph records in the Territory for Company, in a
recording studio selected by Company, embodying Compositions not theretofore
recorded by Artist, and Artist shall perform for the recording of the number of
Masters embodying the performances of Artist as hereinafter provided. Company
shall have the right and opportunity to have a representative attend each
recording session.
(b) During the first Contract Year of the Term hereof, Company shall
request and upon such request Artist shall perform for the recording of Masters
sufficient to constitute one (1) twelve inch (12") Single. It is understood and
agreed that the foregoing is a "minimum recording obligation" and that during
said first Contract Year. Company shall have the right to request, and upon such
request Artist shall perform for, the recording of such number of additional
Masters as Company may request which, when combined with the Masters
constituting the minimum recording obligation in respect of that Contract Year,
are sufficient to constitute up to two (2) LPs.
(c) During each of the second and third Contract Period, if any, of the
Term hereof, Company shall request, and upon such request Artist shall perform
for, the recording of Masters sufficient to constitute two (2) twelve inch (12")
Singles. It is agreed that the foregoing is a "minimum recording obligation" and
that during each of said Contract Period, Company shall have the right to
request, and upon such request Artist shall perform for, the recording of such
number of additional Masters as Company may request which, when combined with
the Masters constituting the minimum recording obligation for such Contract
Period, are sufficient to constitute up to two (2) LPs.
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(d) During each of the fourth through sixth Contract Period, if any, of
the Term hereof, Company shall request, and upon such request Artist shall
perform for, the recording of Masters sufficient to constitute one (1) LP. It is
agreed that the foregoing is a "minimum recording obligation" and that during
each of said Contract Period, Company shall have the right to request, and upon
such request Artist shall perform for, the recording of such number of
additional Masters as Company may request which, when combined with the Masters
constituting the minimum recording obligation for such Contract Period, are
sufficient to constitute up to two (2) LPs.
(e) Unless Company gives its written consent to the contrary, each
phonograph record hereunder (and the Masters embodied therein) shall be a
"studio" record (as hereinafter defined) solely embodying Artist's performance
of Compositions which have been written, composed and recorded subsequent to the
commercial release through normal retail trade channels in the United States of
the immediately prior phonograph record hereunder and which have not previously
been released in the form of phonograph records or otherwise commercially
exploited. As used herein, the phrase "studio" record shall mean a record
comprised solely of Masters embodying recordings of performances by Artist given
in a first-class recording studio, as opposed to before an audience or in any
other venue.
(f) Company shall, at its election, select or approve each of the
Compositions to be recorded hereunder. Artist shall have the absolute right to
confer with Company in regard to selection or approval of the compositions and
Company shall give serious consideration to the Artist's preferences in this
regard.
(g) Each Master shall be subject to Company's approval as satisfactory
for the manufacture and sale of commercially and technically satisfactory
phonograph records. Upon Company's request, Artist shall perform for the
re-recording of any Composition recorded hereunder until a Master which, in
Company's sole judgment, is satisfactory for the manufacture and sale of
commercially and technically satisfactory phonograph records shall have been
obtained and delivered to Company.
(h) If Artist fails to appear at any recording session of which Artist
has been given reasonable notice, for any reason other than labor disagreements,
fire, catastrophe or Act of God, Company shall have the right to charge any of
its out-of-pocket expenses in respect to such session against Artist's
royalties, if and when earned. If, during any Contract Year, Artist records more
than the applicable minimum recording obligations for such Contract Year,
Company may apply all or part of the excess against the minimum recording
obligation for any subsequent Contract Year. If Company obtains, from any
person, firm or corporation, the right to produce phonograph records from any
sound recordings made by Artist prior to the date hereof, Company may apply such
recordings to the minimum recording obligation in any Contract Year.
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(i) Notwithstanding any of the above, in no event shall Artist's
recording commitment hereunder exceed six (6) long playing Albums, absent
further written consent by the parties.
4. Negative Covenants.
(a) Artist warrants that during the Term, Artist shall not either
directly or by or through others permit, license, or consent to the use of
Artist's name (real and/or professional), likeness, voice, biographical material
or other identification (individually and collectively "Artist's
Identification") for or in connection with the recording or exploitation of
phonograph records for anyone other than Company in the Territory.
(b) Artist further warrants that Artist shall not either directly or by
or through others do any of the following prior to the "restriction date" (as
hereinafter defined):
(i) use, perform in connection with the use of, license, authorize,
consent to or permit any person or entity to use, Artist's Identification for or
in connection with the making, recording, releasing or otherwise exploiting in
the Territory any phonograph record including, but not limited to, so-called
"live" recordings (as such term is generally understood in the record industry),
embodying any Composition contained on a Master hereunder; or
(ii) perform for the purpose of making, recording, releasing or
otherwise exploiting in the Territory any phonograph records including, but not
limited to, so-called "live" recordings as such term is generally understood in
the record industry), embodying any Composition contained on a Master hereunder.
(c) The phrase, "restriction date", as used in subparagraph 4(b) above,
shall mean, on a Composition by Composition basis, the later of (i) the date
five (5) years subsequent to the date of delivery to Company of a Master
embodying that Composition, or (ii) the date two (2) years following the
expiration or other termination of the Term of this agreement.
5. Rights Granted to Company. All Masters recorded by Artist during the
Term, together with Masters acquired by Company hereunder and all records and
other reproductions derived therefrom, together with the performances embodied
therein, shall, from inception of their creation, be entirely the property of
Company in perpetuity, throughout the Territory, free of any claim whatsoever by
Artist, or by any persons deriving any rights or interests from Artist
including, without limitation, all rights of copyright therein now or in the
future granted or permitted by law and the right to renew such copyright and
Artist hereby assigns and conveys all of the foregoing rights and interests to
Company. Without limiting the generality of the foregoing, Company and its
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designee(s) shall have the exclusive and unlimited right to all the results and
proceeds of Artist's recording services rendered during the Term, including, but
not limited to, the exclusive, unlimited and perpetual rights throughout the
Territory:
(a) To manufacture, advertise, sell, lease, license, distribute or
otherwise use or dispose of, in any or all fields of use by any method now or
hereafter known, records and other derivatives (in any speed, size or format
whatsoever) embodying the Masters subject hereto, all upon such terms and
conditions as Company may elect; and all such rights may be exercised by firms
owned or controlled by Company or by persons or entities acting pursuant to
Company's authorization.
(b) To use and publish, and to permit others to use and publish,
Artist's name (real and professional, including any professional name heretofore
or hereafter adopted by Artist), photographs, portrait, likeness and
biographical material concerning Artist for advertising and trade purposes, in
connection with all Masters recorded by Artist and all Pictures produced during
the Term, including but not limited to, in the marketing, sale or other
exploitation of records and all merchandise of any kind. Artist shall have the
absolute right to confer with Company to approve the hereinabove matters,
however Artist's approval may not be unreasonably withheld, and in the event of
a disagreement, Company's decision shall prevail;
(c) To obtain copyrights and renewals thereof in sound recordings made
by Artist during the Term, in Company's name as owner and employer-for-hire of
such sound recordings;
(d) The right to release derivatives of any one or more of the Masters
on any medium or device now or hereafter known, under any name, trademark or
label which Company and/or its subsidiaries, affiliates and licensees may from
time to time elect; and
(e) To perform the records publicly and to permit public performances
thereof by means of radio broadcast, television or any other method now or
hereafter known.
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6. Royalties, Company shall pay to Artist the following all inclusive
royalties for the sale of phonograph records derived from the Masters against
which all advances and other chargeable costs paid to or on behalf of Artist,
including, without limitation, the sums referred to in Paragraphs 1(g), 8 and 9
shall be chargeable and Company shall recoup such sums from the following
royalties:
(a)(i) First LP: A royalty of Twelve Per Cent (12%)
Second LP: A royalty of Twelve and One-Half Per Cent(12 1/2%)
Third LP: A royalty of Thirteen Per Cent (13%)
Fourth LP: A royalty of Thirteen and One-Half Per Cent (13 1/2%)
Fifth LP: A royalty of Fourteen Per Cent (14%)
Sixth LP: A royalty of Fourteen and One-Half Per Cent (14 1/2%)
(ii) All singles: A royalty of Ten Per Cent (10%)
of the retail list price for all phonograph records derived from the
Masters delivered to Company during the Term hereof, manufactured and sold for
distribution at retail in the United States and not returned.
(iii) In the event an LP or single exceeds U.S. sales of Five Hundred
Thousand Units (500,000.00), royalties for additional sales for such LP or
single shall increase by One-Half of One Percent (.5%)
(iv) In the event any LP or single exceeds U.S. sales of One Million
Units (1,000,000), royalties for such additional sales for such LP shall
increase by an additional One-Half of One Per Cent (.5%)
(b) A royalty equal to the following percentages of the royalty rate
referred to in paragraph 6(a) above, for all records derived from the Masters
delivered to Company manufactured and sold for distribution at retail outside of
the United States, and not returned:
Canada: Ninety Per Cent (90%)
Europe, United Kingdom, E.E.C., Japan, Australia, New Zealand,
Africa, Brazil, Italy, Malaysia, Mexico, Netherlands, and
Venezuala: Seventy-Five Per Cent (75%)
Remainder of Foreign World: Sixty Per Cent (60%)
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(c) As to records derived from Masters sold in the United States through
record clubs or similar sales plans or devices, Artist shall receive a sum equal
to Forty Per Cent (40%) of Company's net royalty receipts from such sales.
(d) As to records derived from Masters sold for distribution outside of
the United States through record clubs or similar sales plans or devices, Artist
shall receive a sum equal to one-half (1/2) of the applicable royalty rate
provided for in subparagraph 6(b) above.
(e) As to records not consisting entirely of Masters recorded hereunder,
whether such records are sold by Company or by a third party pursuant to a
license from Company, Artist's royalties otherwise payable hereunder shall be
pro-rated on the basis of the number of such Masters which are on such records
compared to the total number of royalty bearing recordings on such records.
(f) Royalties on phonograph records included in albums, jackets, boxes,
or any other type of package or container (herein collectively referred to as
"containers") shall be based solely upon the retail list price of such
phonograph records in containers less all taxes and duties and also less
Company's customary container charge, which at the present time is fifteen per
cent (15%) of the retail list price for album jackets and 12 inch single
jackets; twenty per cent (20%) of the retail list price for pre-recorded tapes
and Singles with so-called "picture sleeves" or "picture jackets"; and
twenty-five per cent (25%) of the retail list price for records made for digital
playback including, without limitation, so-called "compact discs".
(g) As to long-playing records, discs or tapes (other than promotional
records hereinafter provided for) on which the retail list price is one-half
(1/2) or less than the regular retail list price of Company's records, the
royalty rate shall be one-half (1/2) of the basic rate otherwise applicable.
(h) As to records sold in the form of pre-recorded tape by Company or
Company's licensee, the royalty rate shall be the full rate payable under this
agreement.
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(i) In computing the number of records sold hereunder, Company shall
have the right to deduct returns and credits of any nature, including without
limitation, those on account of any return or exchange privilege, (ii)
defective merchandise, and (iii) errors in billing or shipment. Company shall
have the right to withhold a reasonable portion of Artist's royalties as a
reserve, in accordance with its standard accounting practices and procedures,
however in no event shall such reserves exceed Twenty-Five Per Cent (25%), and
such reserves shall be liquidated within Eighteen Months (18) for U.S. sales,
and within Thirty Months (30) for foreign sales.
(j) Company shall have the right to include or to license others to
include any one or more of the Masters in promotional records on which such
Masters and other recordings are included, which promotional records are
designed for sale at a substantially lower price than the regular price of
Company's LPs. No royalties shall be payable on sales of such promotional
records. Company shall confer with Artist in regard to such promotional records,
and Artist shall consent to such promotional records, which consent shall not be
unreasonably withheld.
(k) Company shall have the right to license the Masters to third parties
for phonograph record use and all other types of use on a flat-fee basis.
Company shall credit Artist's royalty account with twenty-five per cent (25%) of
the net amounts received by Company under each such license.
(l) No royalties shall be payable in respect of (i) records given away
or furnished on a "no-charge" basis to "one-stops", rack jobbers, distributors
or dealers, whether or not affiliated with Company; (ii) such additional
"no-charge" records distributed during short term special promotions or
marketing campaign; (iii) records given away or sold at below stated wholesale
prices for promotional purposes to disc jockeys, record reviewers, radio and
television stations and networks, motion picture companies, music publishers,
Company's employees, Artist, or other customary recipients of promotional
records or for use on transportation facilities; (iv) records sold as scrap,
salvage, overstock, or "cut-outs"; (v) records sold below cost; and (vi)
"sampler" records intended for free distribution to automobile purchasers.
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(m) For the sale of records which include Masters subject hereto which
are sold through the method known as "key outlet marketing" by distribution
through retail fulfillment centers in connection with special advertisements on
radio or television, the method known as direct mail or mail order, or by any
combination of the methods set forth above, Company shall credit Artist's
royalty account with a sum equal to forty percent (40%) of Company's net royalty
receipts from such sales.
(n) The royalty rate for records sold for sale in Armed Forces Post
Exchanges shall be one-half (1/2 the applicable basic rate provided for in
subparagraphs 6(a) and 6(b) above.
(o) The royalty rate payable hereunder for records sold as "premiums"
shall be one-half (1/2) of the basic rate otherwise applicable and the retail
list price for such records shall be deemed to be Company's actual sales price.
Company shall be entitled to use and publish, and to license or permit others to
use and publish, Artist's Identification with respect to the products or
services in connection with such "premium" records provided that such use is not
an endorsement of the product or service, such entitlement limited to a period
of fifteen (15) months after such records' complete release.
(p) As to records sold at a discount to "one-stops", rack jobbers,
distributors or dealers, whether or not affiliated with Company, in lieu of the
records given away or furnished on a "no-charge" basis as provided in
subparagraph 6(l) above, the applicable royalty rate otherwise payable hereunder
with respect to such records shall be reduced in the proportion that said
discount wholesale price bears to the usual stated wholesale price.
(q) As to records derived from the Masters recorded hereunder and sold
by Company or its licensees in the "CD" format, the royalty rate shall be the
applicable royalty rate set forth above but, for the purpose of calculating such
royalty, the retail list price of the record shall be deemed to be the retail
list price for Company's then current regular similar records in analog CD
format or, with respect to such records released by Company's licensees outside
the United States, the retail list price for such licensee's then current
regular top-line similar records in analog cassette tape format. As used herein,
the term "CD" means a record which is made for digital playback and includes,
without limitation, so-called "compact discs".
(r) With respect to any Master embodying Artist's performances hereunder
together with the performances of another artist or artists to whom Company is
obligated to pay royalties in respect of phonograph records embodying the joint
performances contained on such Master; (i) the royalty rate to be used in
determining the royalties payable to Artist in respect of such Master shall be
computed by multiplying the royalty rate otherwise applicable thereto by a
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fraction, the numerator of which shall be one and the denominator of which shall
be the total number of royalty artists whose performances are embodied on such
Master; and (ii) in determining the portion of Recording Costs applicable to
such Master which shall be charged against Artist's royalties if and when
earned, such proportion shall be computed by multiplying the aggregate amount of
such Recording Costs by the same fraction used in determining the royalties
payable to Artist in respect of such Master.
It is specifically understood and agreed, however, that Artist shall not be
required to perform hereunder together with any such other artist or artists
unless Artist shall have consented thereto and that no such joint recording
shall be counted toward the fulfillment of Artist's minimum recording commitment
hereunder unless Company shall specifically consent in writing, to count such
joint recording toward the fulfillment of such recording commitment.
(s) Royalties for phonograph records sold for distribution outside of
the United States shall be computed in the same national currency as Company is
accounted to by its licensees and as to sales made outside of the United States,
shall be paid at the same rate of exchange as Company is paid, provided,
however, that royalties on phonograph records sold outside the United States
shall not be due and payable by Company until payment therefor has been received
or credited to Company's account in the United States in United States dollars,
and provided further that if Company shall not receive payment in the United
States or in United States dollars and shall be required to accept payment in
foreign currency or in a foreign country, Company shall deposit to the credit of
Artist (and at the expense of Artist) in such currency in a depository selected
by Artist, payments so received applicable to royalties hereunder, and shall
notify Artist promptly thereof. Deposit as aforesaid shall fulfill the
obligations of Company as to phonograph record sales to which such royalty
payments are applicable.
(t) It is understood and agreed by the parties hereto that the royalties
payable pursuant to this paragraph 6 are intended to and shall include any and
all royalties payable to Artist and the producer(s) of Masters hereunder. With
respect to any phonograph record hereunder which does not consist entirely of
Masters produced by Artist, the royalty rate specified in subparagraph 6(a)
shall be reduced by an amount equal to the basic royalty rate payable to the
producer(s) of the applicable Master(s), and all other royalties provided for in
paragraph 6 shall be reduced proportionately. Any advances payable by Company to
a third party producer of Masters hereunder which advances are not recouped by
Company from royalties payable to such third party producer shall be recouped by
Company from any royalties otherwise payable by Company hereunder, except
mechanical royalties.
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(u) In the event Company licenses Masters for phonograph record use in
connection with any third party compilation album (other than such compilation
albums distributed by means of "key outlet marketing") or in connection with any
so-called "soundtrack album" or records derived therefrom, then, in lieu of any
other payment due under this agreement, Company shall credit Artist's royalty
account with fifty percent (50%) of the net royalties actually received by
Company or credited to Company's account against an advance already received in
connection with the applicable phonograph record.
(v) With respect to mid-priced records, the royalty rate shall be
two-thirds (2/3) of the applicable basic rate provided for in subparagraphs 6(a)
and 6(b) above.
(w) With respect to budget records, the royalty rate shall be one-half
(1/2) of the applicable basic rate provided for in subparagraphs 6(a) and 6(b)
above.
7. Accountings and Audits.
(a) Accountings as to royalties payable by Company to Artist hereunder
shall be made by Company to Artist on or before the first day of October for the
period ending the preceding June 30th, and on or before the first day of April
for the period ending the preceding December 31st, together with payment of
accrued royalties, if any, earned by Artist during such preceding half-year. All
royalty statements and all other accounts rendered by Company to Artist shall be
binding upon Artist and not subject to any objection by Artist for any reason
unless specific objection in writing, stating the basis thereof is given to
Company within twenty-one (21) months from the date rendered. No generalized
objection (such as, but not limited to, a generalized claim of overreporting of
deductions or underreporting of income or any similar generalization) shall be
deemed a valid objection.
(b) Artist shall have the right to appoint a Certified Public Accountant
or attorney, who is not then currently engaged in an outstanding audit of
Company, to examine Company's books and records as the same pertain to this
agreement provided that such examination shall take place at Company's offices
during normal business hours, on reasonable notice, not more than once in each
calendar year during which Artist receives a statement and at Artist's sole cost
and expense. Notwithstanding the foregoing, Company's books and records relating
to any particular royalty statement may be examined as aforesaid only within
fifteen (15) months after the date rendered and Company shall have no obligation
to permit the examination of such books and records relating to any particular
statement more than once. The right conferred by this subparagraph (b) shall
constitute Artist's sole right to examine Company's books and records.
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(c) Neither Artist nor any person or entity acting for or on behalf of
Artist shall have the right to commence any examination of Company's books and
records unless and until the person or entity engaging in any such examination
has agreed in writing, that neither the individual nor the firm engaging in such
examination, nor any representatives thereof, shall at any time or in any manner
either directly or indirectly, disclose or communicate to any person, firm or
corporation, other than Artist or Artist's attorneys or accountants (and such
recipients shall also have executed and delivered to Company similar agreements)
any information acquired from Company's books and records during any such
examination, or any information of any kind concerning any matters reflecting or
relating to Company's business or the business of Company's affiliated companies
obtained through such examination, without regard to whether any or all of such
information would otherwise be deemed confidential material, except pursuant to
legal process issued in connection with a court proceeding. Artist shall cause
Company to receive one (1) copy of any audit report prepared as a result of any
examination of Company's books and records.
(d) If Artist or any person or entity acting for or on behalf of Artist
shall commence suit on any controversy or claim concerning royalty accountings
rendered hereunder, said claims and the scope of the proceedings shall be
limited to determination of the amount of the royalties due for the accounting
period(s) concerned, and neither Artist nor any person or entity acting for or
on behalf of Artist shall seek or be entitled to any equitable relief (other
than an accounting) or any other relief except recovery of royalties found
owing. The recovery of any such royalties shall be the sole remedy available to
Artist by reason of any claim related to Company's royalty accountings or
payments, except in the event of an intentional bookkeeping or accounting error.
Without limiting the generality of the foregoing, neither Artist nor any person
or entity acting for or on behalf of Artist shall have any right to seek or
obtain termination of this agreement or of the Term hereof or any injunction
against Company and/or any third party and/or other equitable (other than an
accounting) relief against Company and/or any third party or avoid the
performance of the Artist's obligations hereunder by reason of any claim
relating to Company's royalty accountings or payments.
8. Payment of Recording Costs. Subject to Artist's compliance with the
provisions hereinbelow set forth, Company shall pay all specifically approved
Recording Costs incurred for the production of the Masters to be recorded
hereunder all of which Recording Costs shall be deemed advances hereunder.
(a) Prior to the commencement of recording in each instance hereunder,
Artist shall obtain Company's approval of each of the following, in order,
before proceeding further, however Artist shall have the absolute right to
confer with Company, and Artist's approval may not be unreasonably withheld.
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(i) Selection of individual or co-producer(s) of the applicable
Masters.
(ii) Selection of material, including the number of Compositions to
be recorded.
(iii) Selection of dates of recording and studios where recording is
to take place, including the cost of recording there. Unless otherwise expressly
agreed by Company, the scheduling and booking of all studio time will be done by
Company.
(iv) A proposed budget (which Artist will submit to Company
sufficiently in advance of the planned commencement of recording to give Company
a reasonable time to review and approve or disapprove it at least fourteen (14)
days before the planned commencement of recording).
(v) Artist shall not enter into or authorize any third party to enter
into any agreements on Company's behalf or incur, directly or indirectly, any
liability or expense of any kind for which Company is or may be held liable, in
connection with any recording session hereunder or otherwise, without having
first obtained Company's prior written approval as to the nature, extent and
limit thereof, except with regard to the payment of items identified in the
budget approved by Company with respect thereto, provided that the amount of
such payment does not exceed the amount budgeted for such item.
(b) If applicable, Artist shall notify the appropriate Local of the
American Federation of Musicians in advance of each recording session.
(c) Artist shall timely supply Company with all of the information it
needs in order: (i) to make payments due in connection with such recordings;
(ii) to comply with any other obligations Company may have in connection with
the making of such recordings; and (iii) to prepare to release phonograph
records derived from such master recordings. Without limiting the generality of
the foregoing, Artist shall deliver to Company or its designee copies of all
substantiating invoices, receipts, vouchers and similar satisfactory documentary
evidence of Recording Costs.
(d) Nothing in this agreement shall obligate Company to commence,
continue or permit the commencement or continuation of any recording or other
similar activity, even if previously approved, if Company reasonably anticipates
that the Recording Costs of the applicable Masters will exceed those specified
in the approved budget or that the Masters being produced will not be
satisfactory.
(e) All Recording Costs shall constitute advances hereunder. Any
Recording Costs in excess of a budget initially established pursuant to
paragraph 8(a)(iv) above, or other amount approved by Company, whichever is
applicable, shall be Artist's sole responsibility and shall be paid by Artist
promptly (or reimbursed by Artist if Company elects, in the exercise of its sole
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discretion, to pay the same on Artist's behalf). Those amounts will also be
recoupable from all sums becoming due under this agreement or otherwise to the
extent to which they have not actually been paid or reimbursed as provided in
the preceding sentence, excluding mechanical royalties.
(f) All Recording Costs and advances hereunder shall be recoupable from
royalties otherwise payable under this agreement. If, at any time during the
Term hereof, Company elects to pay any additional sums to or on behalf of
Artist, other than the royalties referred to in paragraph 6 and 12 hereof and
the Recording Costs provided for in this paragraph, then such sums shall be
deemed additional advances hereunder and shall be recoupable by Company from
record royalties otherwise payable under this agreement, excluding mechanical
royalties. Without limiting the foregoing, if Company engages the services of
independent promoters or marketing consultants in connection with the promotion
or marketing of phonograph records hereunder, then fifty (50) percent of
Company's actual costs in engaging those services will constitute advances to
Artist, and shall be deducted by Company from any and all record royalties
accruing or becoming payable pursuant to this agreement or any other agreement
between Company and Artist. The expenditures referred to in the preceding
sentence, if any, shall be within Company's sole discretion. At Artist's
request, Company shall provide Artist with reasonable details of such
expenditures.
9. Artwork and Publicity. During the Term, Artist shall be reasonably
available at Company's request and expense, whenever the same will not
unreasonably interfere with other professional activities of Artist, to appear
for photography, poster and cover art, etc., under the direction of Company or
its nominees to appear for interviews with representatives of the communications
media and Company's publicity personnel and to perform other reasonable
promotional services.
10. Delivery Requirements. Artist shall deliver to Company a two-track
stereo tape for each Master produced hereunder, which tapes shall be fully
edited, remixed and leadered prior to delivery to Company, so that they are in
proper form for the production of the parts necessary for the manufacture of
commercial phonograph records. Each and every original session tape, including
the multi-track Masters, and parts thereof, and each and every mother, Master,
acetate copy or other derivative shall also be delivered to Company. Company
shall be entitled to remix, re-edit and rerecord any Master delivered hereunder
at its sole discretion. Any costs incurred by Company in any such remixing,
re-editing and re-recording as well as any a costs incurred by Company in the
mastering process shall be deemed additional advances to Artist against
royalties otherwise payable hereunder, excluding mechanical royalties. Masters
shall not be deemed to have been "delivered" hereunder and "delivery" of Masters
shall not be deemed to have occurred unless and until Artist has (i) thoroughly
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and completely performed all of Artist's obligations under this agreement with
respect to such Masters; (ii) executed all consents, approvals, licenses and
permissions as Company may deem necessary or desirable, in the exercise of its
sole discretion, in relation to the use of the Masters hereunder; and (iii)
Company has approved each Master in accordance with the provisions of paragraph
3(g) above.
11. Further Assurances. Artist hereby agrees to execute any further
documents which Company may deem necessary or desirable to effectuate the intent
and substance of this agreement. If Artist shall fail or refuse to execute and
deliver any such document promptly following Company's request therefor, Artist
hereby appoints Company as Artist's true and lawful attorney-in-fact to execute
such documents in Artist's name and on Artist's behalf. Such power of attorney
is irrevocable and is coupled with an interest.
12. Publishing and Administration.
(a) As used in this paragraph 12 only, the term "you" shall refer to
Artist's publishing designee and any other person, firm or corporation owning or
controlling the right, title and interest in and to the Recorded Compositions.
You warrant and represent that you are or shall become member or affiliate of
either Broadcast Music Incorporated ("BMI") or the American Society of
Composers, Authors and Publishers ("ASCAP"). You hereby irrevocably assign,
transfer and otherwise set over to Company's publishing designee (hereinafter
referred to as "Publisher") and its successors and assigns in perpetuity: (i) in
regard to LPs one (1) through three (3) and all singles released during that
period, an undivided one-half interest in and to each and every Recorded
Composition, including the title, lyrics, and music thereof, and in and to the
worldwide copyright therein (and all renewals and extensions thereof) and in and
to all other rights and interests therein of every kind, nature and description,
whether presently known or hereafter to come into existence; and (ii) in regard
to LPS four (4) through (6) six, and all singles released during that period, an
undivided forty (40%) percent interest in and to each and every Recorded
Composition, including the title, lyrics, and music thereof, and in and to the
worldwide copyright therein (and all renewals and extensions thereof) and in and
to all other rights and interests therein of every kind, nature and description,
whether presently known or hereafter to come into existence.
(b) You hereby irrevocably assign to Publisher, its successors and
assigns, the sole and exclusive perpetual worldwide rights of administration,
exploitation and promotion with respect to the Recorded Compositions, including,
without limitation, the sole and exclusive perpetual worldwide right to, exploit
and license the use of the Recorded Compositions including in any and all media
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throughout the world, to substitute new titles for the Recorded Compositions, to
make any arrangement, adaptation dramatization or translations of the Recorded
Compositions, to secure copyright registration of the Recorded Composition in
the name of Publisher and your publishing designee, collect and receive any and
all monies derived from the exploitation of the Recorded Compositions throughout
the world, excluding the writer's share of public performance royalties. You
acknowledge that the extent and manner of exploitation of the Recorded
Compositions shall be entirely within the discretion of Publisher. It is agreed
that mechanical licenses for the use of Record Compositions on records recorded
under this agreement shall be issued on the terms specified in paragraph 13
below.
(c) Publisher shall pay to you:
(i) The writer royalties set forth in the royalty guidelines
attached hereto as Exhibit A;
(ii) An amount equal to fifty percent (50%) of the "Net Publisher's
Share of Income" (as such term in hereinafter defined) received by Publisher in
the course of administering and exploiting its rights in Recorded Compositions.
"Net Publisher's Share of Income" shall mean any and all sums actually received
by Publisher from the exploitation of the Recorded Compositions throughout the
world, including, without limitation, the publisher's share of public
performance fees paid by the performing rights society with which Publisher and
you or your publishing designee are affiliated, (hereinafter referred to as
"Gross Receipts"), less the following:
(A) The writer royalties and other sums which shall be payable
to you pursuant to Paragraph 12(c)(i)hereof;
(B) All actual and documented costs of administration directly
applicable to the Recorded Composition including, without limitation:
(1) copyright fees;
(2) the collection or other fee actually charged by a
collection agent who renders services with respect to the Recorded Compositions;
and
(3) the actual costs and expenses of printing, arranging,
editing, exploiting and selling printed editions of the Recorded Compositions,
including, but not limited to, sales agency expenses, as well as the actual
direct costs and expenses incurred in recording demonstration records, making
tape copies thereof and preparing leadsheets.
(d)(i) To the extent the writer royalties required to be paid by
Publisher exceed those indicated in the writer royalty guidelines attached
hereto as Exhibit 1, Publisher shall have the right to deduct the amount of such
excess from the share of Net Publisher's Share of Income otherwise payable to
you pursuant to Paragraph 12(c) hereof.
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(ii) Publisher shall not be required to pay any royalties on
professional or complimentary printed copies of the Recorded Compositions or
copies of mechanical derivatives of the Recorded Compositions which are
distributed gratuitously to performing artists, orchestra leaders and disc
jockeys or for advertising, promotional or exploitation purposes. Furthermore,
no royalties shall be payable to you on consigned copies of the Recorded
Compositions unless paid for, and not until such time as an accounting therefore
can properly be made.
(iii) Publisher shall deduct, account and pay royalties to each of
the third party songwriters of the Recorded Compositions hereunder provided that
such songwriters have entered into an agreement with Publisher as set forth in
subparagraph (f)(iv) below. If any such songwriter has not entered into such an
agreement, then you warrant, represent, covenant and agree that you shall pay to
such songwriter(s) all royalties (and all other sums due such songwriter(s))
with respect to each exploitation of the applicable Recorded Composition
hereunder due to those songwriter(s) who fail or refuse to enter into such an
agreement. The songwriters will collect any songwriter share of performance
income directly from the performing rights society with which they are
affiliated and Publisher shall have no obligation in such regard.
Notwithstanding that Publisher may from time to time enter into separate
songwriter and/or co-publishing agreements with Artist or Artist's publishing
designee, covering one or more Recorded Compositions hereunder, Artist on
Artist's own behalf and on behalf of Artist's respective publishing designee,
shall and does hereby waive and relinquish the right to receive songwriter
royalties or publishing income from Publisher under agreements and you shall be
solely responsible for and shall pay any and all songwriter royalties and
publishing income due to the songwriter(s) and publishing entities from whom you
derived the rights in and to each Recorded Composition hereunder.
(iv) You shall not be entitled to share in any advance payments,
guarantee payments or minimum royalty payments which Publisher may receive in
connection with any subpublishing agreement, collection agreement, licensing
agreement or other agreement covering the Recorded Compositions.
(e) You hereby grant to Publisher the perpetual right to use and to
permit others to use your name (including any professional name heretofore or
hereafter adopted by you), photograph, likeness and biographical material
concerning you, and the titles of the Recorded Compositions in connection with
the printing, sale, advertising, distribution and exploitation of music, folios,
recordings, performances, player rolls and otherwise concerning the Recorded
Compositions, or to refrain therefrom.
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(f) (i) You hereby authorize and empower Publisher or any of
its officers as your true and lawful attorney (with full power of substitution
and delegation), in your name, and in your place and stead, or in Publisher's
name, to take and do such action, and to make, sign, execute, acknowledge and
deliver any and all instruments or documents, which Publisher from time to time
may deem necessary to vest in Publisher, or its designees, successors, assigns
and licensees, all of the rights or interests granted by you under this
Paragraph 12, including without limitation, such documents as Publisher may deem
necessary to secure to Publisher or its designees, to the extent provided for
herein, the worldwide copyrights in and to the Recorded Compositions for the
entire term of copyright and for any and all renewals and extensions thereof.
The foregoing power is acknowledged by you to be coupled with an interest and to
be irrevocable.
(ii) You shall execute and deliver to Publisher such
documents and instruments with respect to the Recorded Compositions as Publisher
in its sole judgment may deem necessary to effectuate the intent and purposes of
this agreement or to evidence the rights granted to Publisher herein. If you
fail or are unable to execute any document or instrument consistent with the
terms hereof, Publisher will be fully entitled to do so on your behalf pursuant
to the power-of-attorney granted pursuant to Paragraph 12(f)(i) hereof, and such
agreement, document or instrument thereupon will be fully as valid, effective
and operative as if personally executed by you.
(iii) Upon Publisher's request, you shall execute and
deliver to Publisher a separate agreement in Publisher's customary form with
respect to each Recorded Composition. Publisher shall have the right, pursuant
to the terms and conditions hereof, to execute such separate agreement on behalf
of you. Except as specifically set forth in the last sentence of paragraph
12(d)(iii) above, such separate agreement shall supplement and not supercede
this agreement and in the event of any conflict between the provisions of such
separate agreement and the agreement set forth in this Paragraph 12, the
provisions of this Paragraph 12 shall control. The failure of you or Publisher
to execute such separate agreement, whether or not you are requested to execute
same, shall not affect the rights of Publisher to each Recorded Composition.
(iv) Whenever any individual who is not a party to this
agreement shall collaborate in the creation of a Recorded Composition hereunder,
said Recorded Composition shall be subject to the terms and conditions of this
paragraph 12 and you warrant, represent and agree that prior to any such
collaboration you shall advise said third party that all Compositions so created
must be published and owned by Publisher on a basis which is at least as
favorable to Publisher, in the exercise of its reasonable judgment, as the terms
and conditions hereof. In the event of any such collaboration, you shall
promptly notify Publisher of the nature and extent of such other persons
contribution to the applicable Composition and you shall cause such other person
to execute a separate Songwriter's Agreement with Publisher, in Publisher's
customary form, covering said Composition.
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(g) Publisher may take such action as it deems necessary,
either in your name or in its own name, against any person to protect the rights
and interest acquired by Publisher hereunder. You will, at Publisher's request
and expense, cooperate fully with Publisher in any controversy which may arise
or litigation which may be brought concerning Publisher's rights and interests
acquired hereunder. Publisher shall have the right, in its absolute discretion,
to employ and to institute or defend any action or proceeding and to take any
other proper steps to protect the right, title and interest of Publisher in and
to the Recorded Compositions and every portion thereof and in that connection,
to settle, compromise or in any other manner dispose of any matter, claim,
action or proceeding and to satisfy any judgment that may be rendered, in any
manner as Publisher in its sole discretion may determine. Any legal action
brought by Publisher against any alleged infringer of the Recorded Compositions
shall be initiated and prosecuted by Publisher, and if there is any recovery
made by Publisher as a result thereof, after deduction of the expense of
litigation, including but not limited to reasonable attorneys' fees and court
costs, a sum equal to fifty percent (50%) of such net proceeds shall be paid to
you.
(h) Publisher shall account to you for royalties and other
sums payable pursuant to this Paragraph 12 upon the same terms and conditions as
Company is required to account to Artist pursuant to Paragraph 7 hereof. Your
rights and Publisher's rights and obligations with respect to such accountings
shall be the same as Artist's rights and Company's rights and obligations
pursuant to Paragraph 7 hereof. Publisher shall have the right to retain a
portion of mechanical royalties payable hereunder as a reserve against potential
returns and credits. All accounting statements and payments for royalties
payable pursuant to this Paragraph 12 or Paragraph 13 shall be included as a
part of the accountings referred to in Paragraph 7 hereof. Notwithstanding
anything to the contrary contained herein, no monies shall be payable to you
pursuant to paragraph 12(c) above until such time as record royalties would
otherwise be payable to Artist pursuant to paragraph 7 hereof. In connection
with the foregoing, Publisher shall have the right to remain any sums which
might otherwise be payable to you pursuant to paragraph 12(c) and first apply
such sums toward the reduction of the unrecouped balance, if any, of Artist's
record royalty account hereunder.
(i) All sums payable to you and all rights granted by you, and
all representations, warranties, grants and obligations made or undertaken by
you pursuant to this Paragraph 12 shall apply to each person comprising you only
to the extent of such person's authorship; contribution to or ownership or
control of the Recorded Composition concerned. Upon the recording hereunder of a
Recorded Composition, you shall advise Company in writing of the extent of each
person's contribution to and interest in such Recorded Composition, and all
royalties payable hereunder in respect thereof all be divided and paid
accordingly.
(j) Conditional upon your complete compliance with the terms
herewith, Company shall be responsible to pay you the following
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co-publishing and/or writers' advances, which advances shall become payable to
you within one week after delivery of the completed LP master recordings:
(k) Company's co-publishing and administration rights
hereunder shall vest only in recorded compositions hereunder which are
commercially released by Company or at the direction of Company.
(i) first LP, Twenty-Five Thousand Dollars, ($25,000), all
of which is payable within Three (3) business days after full execution of this
agreement by all the parties;
(ii) second LP, Forty Thousand Dollars ($40,000);
(iii) third LP, Sixty Thousand Dollars ($60,000);
(iv) fourth LP, Eighty Thousand Dollars ($80,000);
(v) fifth LP, One Hundred Thousand Dollars ($100,000);
(vi) sixth LP, One Hundred Twenty Thousand Dollars
($120,000).
13. Mechanical Copyright Licenses. Company shall be responsible for
payment of mechanical copyright royalties directly to the copyright proprietors
of Compositions embodied in Masters hereunder. Artist shall assist Company in
obtaining mechanical licenses from the copyright proprietors of the Compositions
embodied upon the Masters delivered to Company hereunder, which licenses shall
be in the general form utilized by The Harry Fox Agency, Inc. or otherwise
acceptable to Company. The Controlled Compositions recorded pursuant to this
agreement are hereby licensed to Company at the rates set forth below and
mechanical royalties in respect thereof shall only be payable on records for
which royalties are payable pursuant to Paragraph 6 hereof:
(a) Seventy-five percent (75%) of the minimum statutory rate
at the time of release, however in the event of sales exceeding five hundred
thousand (500,000) units, Eighty-seven and one-half percent (87 1/2%) of the
minimum statutory rate, or, in the event of sales exceeding One Million
(1,000,000) units, then One Hundred percent (100%) of the minimum statutory
rate.
(b) Notwithstanding the rate specified in subparagraph 13(a)
above and under the United States Copyright laws, it is specifically understood
and agreed that the maximum copyright royalty rate which Company will be
required to pay hereunder, regardless of the number of Compositions (including
Controlled Compositions) contained thereon, shall be not greater than ten (10)
times the above stated minimum statutory rate for Lps, not greater than eleven
(11) times the stated minimum statutory rate for CDs; not greater than five (5)
times the above stated minimum statutory rate for EPs; and not greater than
twice the above stated minimum statutory rate for singles.
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14. Artist's Warranties and Indemnification. Artist warrants and
represents the following:
(a) There are now in existence no prior recorded performances
by Artist which have not yet been released in the form of phonograph records.
(b) There are no restrictions with respect to Compositions
Artist is legally able to perform for Company hereunder.
(c) No contract or agreement of any kind entered into by
Artist prior to the time of the execution hereof or during the Term hereof will
interfere in any manner with complete performance of the within agreement by
Artist.
(d) Artist has the right to use Artist's name, (real and
professional) grants to Company for the Territory the exclusive right to use and
allow others to use said names and any other name(s)used by Artist for
phonograph record purposes during the Term hereof and the exclusive right to
such use thereafter in connection with recordings subject hereto; Company's use
of such names in accordance with the terms hereof will not infringe upon the
rights of any third party.
(e) Artist is over eighteen (18) years of age.
(f) That neither the Masters nor the performances embodied
thereon, and no use thereof by Company or its grantees, licensees or assigns
will constitute a libel or slander of any person or violate or infringe upon the
rights of any third party.
(g) That neither the music, title, lyrics or other material
comprising the Compositions to be recorded hereunder, nor any part thereof, will
be a copy of any other copyrighted work or infringe or violate any rights of any
third party and that no adverse claim exists or shall exist thereon.
(h) The Masters and the performances embodied thereon shall be
produced in accordance with the rules and regulations of the American
Federation of Musicians and the American Federation of Television and Radio
Artists, if applicable, and in accordance with the rules and regulations of said
unions and all other unions having jurisdiction.
(i) Company shall not be required to make any payments of any
nature for, or in connection with, the rendition of Artist's services or the
acquisition, exercise or exploitation of rights by Company pursuant to this
agreement, except as specifically set forth herein. Without limiting the
generality of the foregoing, except as specifically set forth herein, Artist
warrants and represents that Artist shall be solely responsible for and shall
make any and all payments becoming due to any person, firm or corporation,
including, but not limited to, the individual producers hereunder, in connection
with the rendition of Artist's services or the acquisition, exercise or
exploitation of rights by Company pursuant to this agreement.
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(j) If any Compositions are recorded hereunder which are not
Controlled Compositions, Artist warrants and represents that Company shall be
able to obtain mechanical licenses therefor for the United States and Canada at
rates which are no greater than the applicable "Statutory Rate" (as hereinafter
defined) and on terms no less favorable to Company than those contained in the
then current standard license form utilized by the Harry Fox Agency, Inc. and
Artist shall assist Company in obtaining said mechanical licenses. As used
herein, the phrase "Statutory Rate" means, with respect to each Composition
embodied in a Master hereunder, the fixed (without regard to playing time)
mechanical royalty rate in effect pursuant to the United States Copyright Act or
the Canadian Copyright Act (as the context so requires) at the earlier of the
time of commercial release of such Master.
(k) Neither Artist nor any representative of Artist shall
directly or by or through others deliver or authorize or permit the delivery of
any recordings embodying Masters hereunder to any person or entity other than
Company (for promotion or any other purpose) at any time prior to Company's
commercial release thereof for sale through normal retail trade channels in the
United States.
(1) Artist agrees to and does hereby indemnify, save and hold
Company harmless of and from any and all losses and damages (including
reasonable attorneys' fees) arising out of or connected with any breach of this
agreement or any warranty, representation, promise or covenant made by Artist
herein, or any bona fide claim by one or more third parties which is
inconsistent with any of the warranties, representations, promises or covenants
made by Artist herein. Artist agrees to reimburse Company, on demand, for any
payment made by Company at any time after the date hereof with respect to any
liability or claim to which the foregoing indemnity applies. Pending the
determination of any claim involving such alleged breach or failure, Company and
Publisher may withhold sums due Artist and Artist's publishing designee(s)
hereunder in an amount reasonably related to such, claim(s). If no claim is
presented within one (1) year after monies are received by or credited to
Company, then any sums withheld shall be released to Artist. Further, Artist
shall have the right to post a bond for the full amount of any claims in lieu of
Company withholding funds. Company's and Publisher's rights to indemnification
and payments hereunder shall fully vest in regard to claims reduced to final,
non-appealable judgements.
15. Failure of Performance.
(a) Company may, by written notice to Artist, suspend the
operation of the Term for the duration of the following contingencies if by
reason of such contingencies, it is materially hampered in the recording,
manufacture, distribution or sale of records, or its normal business operations
become commercially impracticable: labor disagreements, fire, catastrophe,
shortage of materials, or any cause beyond Company's control. A number of days
equal to the total of all such days of suspension shall be added to the Contract
Year in which such contingency occurs and the dates for
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the exercise by Company of its options as set forth in Paragraph 2 and the date
of commencement of subsequent Contract Years shall be deemed extended
accordingly, not to exceed six (6) months.
(b) In the event of any default or material breach by Artist
in the performance of any of Artist's duties or obligations hereunder (including
the obligation in the event of any material breach by Artist of Artist's
warranties, representations, liabilities, authorizations, restrictions or
agreements contained herein, then the Contract Year in effect at the time of
said default or breach shall, unless Company notifies Artist in writing to the
contrary, be automatically extended for a period equal to all or, at Company's
election, any part of the period of such default or breach, plus an additional
period of sixty (60) days, and the dates for the exercise by Company of its
options as set forth in Paragraph 2 above, and the date of the commencement of
Subsequent Contract Years shall be deemed extended accordingly. No exercise by
Company of its approval rights or any other rights or remedies hereunder shall
constitute or be deemed to constitute a refusal to allow Artist to perform
hereunder, nor shall same preclude or in any way limit Company's right to
exercise any of the rights and/or remedies set forth in this subparagraph (b),
or otherwise.
(c) In the event of any default or material breach by Artist
in the performance of any of Artist's duties or obligations hereunder including
the obligation to timely deliver Masters hereunder), or in the event of any
breach by Artist of Artist's warranties, representations, liabilities,
authorizations, restrictions or agreements contained herein, then, in addition
to all of Company's other rights and remedies, including as set forth in
subparagraph (b) above and unless Company notifies Artist to the contrary,
Company's obligations hereunder shall be automatically suspended, including, but
not limited to, its obligation to account and/or pay royalties including, but
not limited to mechanical copyright royalties and advances, for the duration of
such default or breach and until the same has been cured.
(d) In the event of any default or material breach by Artist
in the performance of any of Artist's duties or obligations hereunder (including
the obligation to timely deliver Masters hereunder), or in the event of any
breach by Artist of Artist's warranties, representations, liabilities,
authorizations, restrictions or agreements contained herein, then, in addition
to all of Company's other rights and remedies, including as set forth in
subparagraphs (b) and (c) above, Company shall have the right, upon written
notice to Artist, to terminate the Term.
(e) Without limiting the generality of subparagraphs (b)and
(c) above, it is specifically agreed that any default or material breach by
Artist or their respective publishing designee(s) in the performance of any of
its or their respective duties or obligations pursuant to paragraph 12 hereof,
and any material breach by Artist or their respective publishing designee(s) of
any of the warranties, representations, liabilities, authorizations,
restrictions or agreements contained herein shall constitute and be deemed a
default and material breach by Artist in the performance
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of Artist's material obligations under this agreement and shall entitle Company
to exercise the rights and remedies described in subparagraphs (b) and c) above,
in addition to any other rights or remedies which Company may have at law, in
equity or otherwise.
(e) Notwithstanding anything to the contrary contained in this
agreement, it is specifically acknowledged and agreed that any suspension by
Company of its obligation under this agreement shall automatically serve to
suspend the obligations of Publisher hereunder including, but not limited to,
the obligation to account and/or pay royalties, for the duties of such
suspension hereunder. In addition to the foregoing, and without limiting the
generality thereof, it is agreed that any suspension by Publisher of its
obligations hereunder shall automatically serve to suspend the obligations of
Company hereunder, as described above, for the duration of any such suspension.
16. Individual Producers. Company shall select or at its election
approve of the individual producer(s) of the Masters embodying Artist's
performances hereunder. The parties agree that regardless of who or whom is
chosen as Producer(s) he agrees to furnish his services in connection therewith
as and when requested by Company in accordance with the terms and provisions of
this agreement. Artist shall cause each and every person or entity who performs
at any time or renders services of any kind in connection with the production
and/or recording of Masters hereunder to execute and deliver to Company an
inducement letter in the form of Exhibit "B" (annexed hereto and made a part
hereof)or in such other form as Company may reasonably request or approve in
writing. Unless otherwise expressly agreed in writing by Company, Artist shall
be responsible for and shall pay each and every producer of Masters hereunder.
17. Approvals and Consents. Whenever in this agreement Artist's
approval or consent is required, Company may require Artist to formally give or
withhold such approval or consent by giving Artist written notice requesting the
same and by furnishing Artist with the information or material in respect of
which such approval or consent is sought. Artist shall give Company written
notice of approval or disapproval within five (5) business days after such
notice is received by Artist. In the event of disapproval or no consent, the
reasons therefor shall be stated. Failure to give such notice to Company as
aforesaid shall be deemed to be consent or approval. In the event that mutual
approval or consent between Company and Artist or Artist's representative is
required pursuant to the terms or conditions of this agreement with respect to
any matter, and in the further event of a disagreement or failure to mutually
approve or consent with respect thereto, then Company's decision with respect
thereto shall control conclusively.
18. Additional Recording Rights. Artist agrees not to record or
authorize or knowingly permit to be recorded for any purpose any performance for
a third party without in each case taking reasonable measures to prevent the
manufacture, distribution and sale at any time by any person other than Company
of phonograph records and other
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devices for home use and/or jukebox use and/or use on or in means of
transportation embodying such performance. Specifically, without limiting the
generality of the foregoing, Artist agrees that:
(a) If, during the Term, Artist performs any Composition for
the purposes of making transcriptions for radio or television or soundtracks for
motion picture films, or
(b) If, during the period referred to in Paragraph 4(b)
hereof Artist performs for any such purpose any Composition which shall have
been recorded pursuant to this agreement, then, in either event, Artist will do
so only pursuant to a written contract containing an express provision that
neither such performance nor any recording thereof will be used directly or
indirectly for the purpose of making phonograph records or any other device for
home use and/or jukebox use and/or use on or in means of transportation. Artist
will promptly furnish to Company a copy of the pertinent provisions of each such
contract and will cooperate fully with Company in any controversy which may
arise or litigation which may be brought relating to the rights of Company under
the paragraph.
19. Merchandising Rights.
(a) Artist hereby grants to Company the exclusive right during
the Term hereof and throughout the Territory to use and/or sublicense to others
the use of Artist's name(s) (both real and professional), logotype, likenesses,
voice and/or performances for merchandising and other commercial purposes,
whether or not related to the manufacture and sale of phonograph records,
including, without limitation in connection with the sale (whether through
"flyers", "bouncebacks" and similar album inserts, or otherwise) of t-shirts and
other clothing, posters, stickers, novelties and telephone message services.
Upon Company's request, Artist shall execute a license agreement in addition to
this agreement to evidence such license, which license agreement shall contain
standard terms and provisions used the licensing of name and likeness rights for
merchandising purpose, though the failure on the part of the Artist to do so
shall not diminish the rights of Company with respect to the merchandising of
the aforesaid properties.
(b) If Artist shall fail to do so upon request, Company shall
have the right to apply for and obtain in its own name, and at its own expense,
federal and worldwide registration of trademark and/or servicemark for Artist's
professional name and/or logotype in connection with the use thereof in all
areas the entertainment industry, including without limitation, in connection
with the recording and sale of phonograph records, the establishment of
fanclubs, the rendition of concert and live performances, and the sale of
clothing and other merchandise Artist shall execute any document and/or perform
any act necessary to evidence Company's rights in and to said servicemarks
trademarks, logotypes and other properties. If Artist fails to do so, an officer
of Company may do so on Artist's behalf.
(c) Company agrees to credit to Artist's royalty account with
fifty percent (50%) of the net income derived by Company
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from the exploitation of the rights granted to it by virtue of (a) and (b)
above. For the purposes hereof, "net income" shall mean the gross income
actually received by Company which is derived directly and solely from such use
of the rights granted to it by this Paragraph, less direct expenses actually
incurred by Company relative thereto including but not limited to: (i) costs of
collection; (ii) commissions and/or royalties payable to third parties; (iii)
costs of packing, shipping, storing, postage and insurance; (iv) costs of
manufacture and design; and (v) advertising and promotion expenses.
(d) Royalties payable in respect of such merchandising
activity shall be accounted for and paid, in the manner otherwise provided
herein.
20. Audiovisual Programs.
(a) In addition to Artist's recording and delivery commitments
as set forth in this agreement, Artist shall comply with requests, if any, made
by Company in connection with the production of video-tape and/or films with
soundtracks substantially featuring performances of Artist (hereinafter,
"Programs"). In this connection, Artist shall appear on dates and at places
requested by Company for the filming, taping or other fixation of Programs.
Artist shall perform services with respect thereto as Company deems desirable in
a timely and first-class manner. Artist acknowledges that the production of
Programs involves matters of judgment with respect to art and taste, which
judgment shall be exercised by Company solely in its own discretion and that
Company's decisions with respect thereto shall be final, however, Artist shall
have the absolute right to confer with Company in regard to these important
matters.
(b) (i) Each Program produced during the Term of the
agreement shall be owned by Company (including the worldwide copyrights therein
and thereto and all extensions and renewals thereof) to the same extent as
Company's rights in Master recordings made under this agreement.
(ii) Company will have the unlimited right to
manufacture Videograms, as defined below, of the Programs and to rent, sell,
distribute, transfer, sublicense or otherwise deal in such Videograms under any
trademarks, tradenames and labels; to exploit the Programs by any means now or
hereafter known or developed; or to refrain from any such exploitation,
throughout the world. A "Videogram" is hereby defined as any device, now or
hereafter known or developed, that enables a Program to be perceived visually,
with or without sound, when used in combination with or as part of a piece of
electronic, mechanical or other apparatus.
(c) (i) Following Company's receipt of invoices therefor,
Company agrees to pay all costs actually incurred in the production of Programs
made at Company's request hereunder, provided such costs have been previously
approved by Company in writing. In
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this connection, prior to commencing production of any Program, Company shall
create, or at its election, approve, in writing, a detailed budget for each
Program. Said budget shall include the following information: (i) the musical
compositions and other material to be embodied thereon; (ii) the general concept
therefor and (iii) the producer, director, and any other key personnel therefor.
Following Company's notification to Artist, which need not be in writing, that
said budget is completed and approved, Artist shall commence production of the
Program. All costs incurred in excess of the applicable approved budget shall
be Artist's sole responsibility and Artist agrees to pay and discharge all such
excess costs. In the event Company agrees to pay any such excess costs on
Artist's behalf, Artist shall, upon demand, reimburse Company for such excess
costs and/or Company may deduct such excess costs from any and all monies due to
Artist pursuant to this or any other agreement between Company and Artist. All
costs and expenses of the type set forth in subparagraph 20(c) (ii) below for
which Company is responsible as aforesaid, which costs arise out of or in
connection with the production of the Program(s) hereunder, shall be fully
recoupable from Video Net Receipts (as defined below) and from record royalties
otherwise payable under this agreement. "Video Net Receipts" shall mean monies
earned and received by Company from exploitation of Programs less (i) a gross
distribution fee of (A) thirty-five (35%) percent in respect of broadcast,
telecast, cablecast or other exploitation and (B) forty percent (40%) in respect
of broadcast, telecast, cablecast or other exhibition outside the United States,
and (ii) any out-of-pocket expenses, copyright, union and other third party
payments, taxes and adjustments borne by Company in connection with exploitation
and collection and receipt by Company of such monies.
(ii) Fifty (50%) percent of the following sums, if
any, paid by Company in connection with each Program shall be an advance, and
shall be recoupable by Company in the manner set forth in subparagraph 20(c)(i)
above:
(A) All expenses incurred by Company in
connection with the preparation and production of the Program and the conversion
of the Program to "video masters" that are made to serve as prototypes for the
duplication of the Videograms of the Program;
(B) All of Company's direct out-of-pocket
costs (such as for rights, artists (including Artist), other personnel,
facilities, materials, services, and the use of equipment) in connection with
all steps in the production of the Program and the process leading to and
including the production of the aforesaid video masters (including, but not
limited to, packaging costs and the costs of making and delivering duplicate
copies of such video masters); and
(C) If in connection therewith Company
furnishes any of its own facilities, materials, services or equipment for which
Company has a standard rate, the amount of such standard rate or if there is no
standard rate, the market value for the services or thing furnished.
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(iii) All sums that Company in its sole discretion
deems necessary or advisable to pay in connection with the production of
Programs and the exploitation of Company's rights therein in order to clear
rights or to make any contractual payments that are or may become due on the
part of Company, to Artist or any other person, firm or corporation by virtue of
the exploitation of Company's rights therein, in order to avoid, satisfy or make
unnecessary any claims or demands by any person, firm or corporation claiming
the right to payment therefor, including, but not limited to, any payment to an
actual or alleged copyright owner, patent owner, union, union-related trust
fund, pension plan or other entity, and any payment for an actual or alleged
re-run fee, residual, royalty, license fee or otherwise shall constitute
advances against and shall be recoupable out of all royalties becoming payable
to Artist pursuant to this. No payment pursuant to this subparagraph 20(c) (iii)
shall constitute a waiver of any of Artist's express or implied warranties and
representations.
(d) (i) Conditioned upon Artist's full and faithful
performance of all of the material terms and conditions of this agreement,
Company shall pay Artist royalties egual to fifty percent (50%) of Company's
Video Net Receipts with respect to Company's exploitation of Programs subject to
this agreement. Monies earned and received by Company or credited to Company's
account from any licensee (rather than monies earned and received by the
licensee) in respect of exploitation of Programs shall be included in the
computation of Video Net Receipts.
(ii) With respect to any royalty obligations Company
may have to any other person, firm or corporation who supplied services or
rights used in connection with Programs, including, without limitation,
producers, directors, extras, and music publishers, such royalties shall be paid
out of and deducted from Video Net Receipts, prior to the payment of the
royalties otherwise payable to Artist in respect of Programs.
(iii) With respect to audiovisual material embodying,
Programs made hereunder together with other audiovisual material, royalties
payable to Artist shall be computed by multiplying the royalties otherwise
applicable by a fraction, the numerator of which is the amount of playing time
in such audiovisual material of Programs made hereunder and the denominator of
which is the total playing time of such audiovisual material. With respect to
such audiovisual material, only a fraction of the joint production costs
incurred in connection therewith shall be attributable to Programs and
chargeable hereunder, the numerator of which is the amount of playing time of
the material which contains Programs and/or footage featuring or concerning
Artist, and the Denominator of which is the total playing time of such
audiovisual material; provided that any such production costs which are
particularly attributable to Programs and/or Artist hereunder shall not be
apportioned as joint production costs as aforesaid.
(e) Company shall have the right to use and allow others to
use each Program solely for advertising and promotional purposes with no payment
to Artist.
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(f) (i) During the Term of this agreement, no person, firm or
corporation other than Company will be authorized to make, sell, broadcast or
otherwise exploit audio-visual materials featuring Artist unless: (i) Artist
first notifies Company of all of the material terms and conditions of the
proposed agreement pursuant to which the audio-visual materials are to be made,
sold, broadcast or otherwise exploited, including, but not limited to, the
titles of the musical compositions covered by the proposed agreement, the format
to be used, the manner of exploitation proposed and the identities of all
proposed parties to the agreement, and (ii) Artist offers to enter into an
agreement with Company, containing the same terms and conditions described in
such notice and otherwise in the same form as this agreement, but with payments
to Artist that are one hundred percent (100%) of the payments to Artist in such
proposed agreement. If Company does not accept receipt of same, Artist may then
enter into that proposed agreement within the same parties mentioned in such
notice, subject to subparagraph 20(f) (ii) hereof and provided that such
agreement consummated with those parties within thirty (30) days after the end
of that sixty (60) day period upon the same terms and conditions set forth in
Artist's notice and offer to Company. If that agreement is not consummated
within said thirty (30) day period, no party except Company will be authorized
to make, sell, broadcast or otherwise exploit such audio-visual materials unless
Artist first offers to enter into an agreement with Company as provided in the
first sentence of this subparagraph 20(f). Company will not be required, as a
condition of accepting any offer made to Company pursuant to this subparagraph
20(f) to agree to any terms or conditions which cannot be fulfilled by Company
as readily as by any other part (for example but without limitation, the
employment a particular producer or director).
(ii) If Company does not accept an offer made to it
pursuant to this subparagraph 20(f), such non-acceptance shall not be considered
a waiver of any of Company's rights pursuant to this agreement. Such rights
include, without limitation, the right to prevent Artist from exploiting
audiovisual material featuring Artist in the form of Videograms, and the right
to prevent Artist from authorizing any use of Masters owned by or exclusively
licensed to Company unless Company so agrees. Artist shall not act in
contravention of such rights.
(g) In all other respects (e.g., the times for accountings to
be rendered, and warranties and representations made by Artist) Programs,
Videograms and video masters shall be governed by the same terms and conditions
as are applicable to Masters subject to this agreement.
(h) Conditional upon Artist performing faithfully hereunder,
Company agrees that in regard to the first LP, Company shall cause to be
produced not less than one (1) Audiovisual Program. In regard to the second LP,
Company shall cause to be produced not less than two (2) Audiovisual Programs,
conditional upon the gross unit sales of the first LP exceeding Two Hundred
Thousand Units (200,000).
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(i) In regard to Audiovisual Programs produced for commercial
sale and related purposes, Company shall pay Artist a royalty of ten (10%)
percent in regard to such sales and related commercial use.
21. INTENTIONALLY DELETED.
22. Unions. Artist agrees that Artist is, or will become, and that
Artist will remain during the Term a member in good standing of any labor unions
with which Company may, at any time, have agreements lawfully requiring such
union membership. The provisions of the applicable collective bargaining
agreement shall be deemed incorporated herein to the same extent as if fully set
forth herein.
23. Eguitable Relief. Artist expressly agrees that Artist's services
hereunder are of a special unique character and that in the event of a breach by
Artist of any term, condition or covenant herein, Company shall be entitled to
injunctive relief in addition to any other remedies available to it.
24. Use of Name(s). So long as this agreement is in effect, Artist
shall not assign Artist's professional name(s) (or any other name(s) utilized in
connection with records subject hereto) or permit the use of such names by any
other individual(s), firm(s) or corporation(s) without Company's prior written
consent, and any attempt to do so shall be null and void and shall convey no
other right or title. The parties acknowledge that other than Company, no other
person, firm or corporation has the right to use said names or permit them to be
used in connection with phonograph records, and that Artist has the authority to
grant to Company the exclusive right to use said names in the Territory in
accordance with all of the terms and conditions of this agreement and Company
shall have the exclusive right to use said names as aforesaid. Artist shall not
waive, release, assign or forfeit its exclusive rights to said names.
25. Benefit, Assignment. This agreement shall inure to the benefit of
and be binding upon the successors, permitted assigns and representatives of the
parties hereto. Company may, at its election, assign this agreement, in whole or
in part, or any of its rights or remedies hereunder to any third party. Artist
shall not have the right to assign this agreement without Company's prior
written consent.
26. Severability. If any clause, sentence, paragraph or part of this
agreement or the application thereof to any person, shall for any reason be
adjudged by a court of competent jurisdiction to be invalid, such judgment shall
not affect the remainder of this agreement, which shall continue in full force
and effect but such judgment shall be limited and confined in its operation to
the clause, sentence, paragraph or part thereof directly involved in the
controversy in which such judgment shall have been rendered and to the person
involved.
27. Notices. All notices hereunder required to be given to Company
shall be sent to Company at its address first mentioned
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herein and all royalty statements and payments and any and all notices to Artist
shall be sent to Artist at their respective addresses first written above, or
such other address as each party respectively may hereafter designate by notice
in writing to the other. All such notices shall be in writing and, except for
royalty statements, shall be sent by registered or certified mail, return
receipt requested, and the day of mailing of any such notice shall be deemed the
date of the giving thereof. All notices to Company shall be served upon Company
at the address first indicated above. A copy of all notices to Company shall be
sent to Simon J. Rosen, Esq., 1515 Market St. Suite 1810; Phila., PA 19102. A
copy of all notices to Artist shall be sent to Osse and Woods, P.C., attn:
Reginald Osse, Esq., at the address first indicated above.
28. Minimum Recording Commitment/Delivery.
(a) If, in respect of any Contract Year of this agreement,
Company fails to request Masters to constitute the minimum recording obligation
provided for in Paragraph 3 hereof, and if, within thirty (30) days after the
expiration of the applicable Contract Year, Artist shall notify Company by
certified mail of Artist's request that Company record such of Artist's
performances as will fulfill Company's minimum obligation hereunder, then
Company shall, within thirty (30) days after its receipt of such request,
request such performances or, if Company fails to do so, then the Term of this
agreement shall automatically expire and Company shall have no liability to
Artist in connection with any such failure. In the event that Artist does not so
notify Company within such thirty (30) day period, then Company shall be under
no obligation to Artist for failure to request Masters constituting such minimum
recording obligation.
(b) Artist shall perform for the recording of Masters so that
Masters (fully edited and mixed) together with all necessary approvals consents,
licenses and permissions shall be delivered to Company during each Contract Year
in accordance with the following schedule:
(i) Each set of Masters sufficient to constitute a
Single shall be delivered within thirty (30) days following Company's request
therefor.
(ii) Each set of Masters sufficient to constitute an
LP shall be delivered to Company within sixty (60) days following Company's
request therefor.
(c) Notwithstanding anything to the contrary contained in this
agreement, neither the Initial Period nor any subsequent contract Year hereunder
shall expire sooner than the one hundred fifty (150) days following the date of
Artist's delivery to and Company's acceptance of, in accordance with all of the
terms and conditions of this agreement, all of the Masters requested by Company
prior to the expiration of the Initial Period or the applicable Contract Year,
and the then current Contract Year shall be automatically extended in accordance
with the above.
29. Cure. Company shall not be deemed to be in breach of
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any of its obligations hereunder unless within thirty (30) days after Artist
learns of such alleged breach Artist serves specific written notice upon Company
of the nature of such breach and Company shall have failed to cure such breach,
if any, within thirty (30) days following its receipt of such written notice.
30. Legal Representation. The parties acknowledge that they have
retained separate and independent counsel and have been fully advised regarding
every aspect of this agreement; that no party in any sense participated in the
selection of the other parties' counsel; that they have read and understood
this agreement; and they believe that the provisions of this agreement are fair
and equitable.
31. Choice of Law, Venue, Legal Fees. This agreement is entered into in
Commonwealth of Pennsylvania and shall be construed in accordance with the laws
of said state applicable to contracts to be wholly performed therein. The
Pennsylvania courts (state and federal) only shall have jurisdiction of any
controversies regarding this agreement; any action or other proceeding which
involves such a controversy will be bought in those courts, in the County of
Philadelphia, and not elsewhere.
32. Entire Agreement, Waiver. This writing sets forth the entire
understanding between the parties with respect to the subject matter hereof, and
no modification, amendment, waiver, termination or discharge of this agreement
shall be binding upon Company or Artist unless confirmed by a written instrument
signed by an officer of Company and Artist. No waiver of any provision or
default under this agreement shall effect the rights of Company thereafter.
33. Headings. The headings used in this agreement are for convenience
only and are not to be used to construe this agreement.
THE COMPANY AND PUBLISHER HAVE MADE AND MAKE NO REPRESENTATION OR
WARRANTY WITH RESPECT TO ANY MATTER PROVIDED FOR IN THIS AGREEMENT INCLUDING (i)
THE AMOUNTS, IF ANY, OF NET ROYALTIES OR ROYALTIES REALIZABLE FROM RECORDINGS OR
PHONOGRAPH RECORDS; OF NET INCOME REALIZABLE FOR MERCHANDISING; OF GROSS
RECEIPTS OR INCOME REALIZABLE FROM PROGRAMS; OR OF ROYALTIES OR NET PUBLISHERS
SHARE OF INCOME REALIZABLE ON THE PUBLISHING OF COMPOSITIONS, OR (ii) ANY
EFFORTS COMPANY AND/OR PUBLISHER MAY EXERT TO REALIZE ANY SUCH AMOUNTS, COMPANY
AND PUBLISHER HAVING NO LIABILITY FOR ANY FAILURE TO REALIZE ANY THEREOF.
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ARTIST ACKNOWLEDGES THAT ARTIST HAS READ EACH AND EVERY PART OF THIS
AGREEMENT. ARTIST HEREBY ACKNOWLEDGES ARTIST'S UNDERSTANDING THAT THIS
AGREEMENT IS AN IMPORTANT LEGAL DOCUMENT PURSUANT TO WHICH COMPANY IS GRANTED
ARTIST'S EXCLUSIVE RECORDING SERVICES FOR THE UNIVERSE FOR A PERIOD OF UP TO
SEVEN (7) YEARS, AS SUCH PERIOD MAY BE EXTENDED IF ARTIST'S OBLIGATIONS UNDER
THE AGREEMENT ARE NOT TIMELY FULFILLED. ARTIST ALSO ACKNOWLEDGES ARTIST'S
UNDERSTANDING THAT THE AGREEMENT GRANTS TO COMPANY'S PUBLISHING AFFILIATE AN
UNDIVIDED FIFTY PERCENT (50%) INTEREST, INCLUDING THE COPYRIGHT INTEREST AND
AN UNDIVIDED ONE HUNDRED PERCENT (100%) ADMINISTRATION INTEREST IN THE MUSICAL
COMPOSITIONS WHICH ARE WRITTEN, COMPOSED, OWNED AND/OR CONTROLLED BY ARTIST
AND EMBODIED ON MASTER RECORDINGS WHICH ARE SUBJECT TO THIS AGREEMENT. ARTIST
HEREBY WARRANTS AND REPRESENTS THAT ARTIST HAS BEEN ADVISED OF ARTIST'S RIGHT
TO RETAIN INDEPENDENT LEGAL COUNSEL AND COMPANY HAS RECOMMENDED THAT ARTIST
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RETAIN LEGAL COUNSEL IN CONNECTION WITH THE NEGOTIATION AND EXECUTION OF THIS
AGREEMENT.
ARTIST WARRANTS THAT THEY ARE ABOVE THE AGE OF MAJORITY. ARTIST
ACKNOWLEDGES THAT THIS AGREEMENT BINDS ARTIST INDIVIDUALLY AND COLLECTIVELY, AND
THAT IN THE EVENT OF A BREAK-UP OF THE GROUP, SUCH AS A LEAVING MEMBER, DEATH,
INCAPACITY, ETC., EACH AND EVERY ARTIST IS STILL BOUND UNDER THIS EXCLUSIVE
AGREEMENT.
IN CONSIDERATION FOR ARTIST'S PROMISES HEREUNDER, CONTEMPLATING
ARTIST'S FULL AND FAITHFUL PERFORMANCE, COMPANY SHALL PAY ARTIST A RECORDING
BUDGET ADVANCE AGAINST ROYALTIES OF THE AGGREGATE SUM OF TWENTY-FIVE THOUSAND
DOLLARS ($25,000.00), PAYABLE UPON THE EXECUTION OF THIS AGREEMENT BY ALL
PARTIES.
THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT IS NULL AND VOID, AND THE
PARTIES OBLIGATIONS HEREUNDER TERMINATED, IN THE EVENT THAT COMPANY FAILS TO
SECURE A NATIONAL DISTRIBUTION DEAL WITHIN ONE (1) YEAR AFTER THE COMPLETE
EXECUTION OF THIS AGREEMENT.
THE PARTIES AGREE THAT THE RECORDING BUDGET FOR EACH LP SHALL BE AS
FOLLOWS:
MINIMUM MAXIMUM
LP 1 $50,000.00 $150,000.00
LP 2 75,000.00 175,000.00
LP 3 75,000.00 200,000.00
LP 4 100,000.00 225,000.00
LP 5 100,000.00 250,000.00
LP 6 125,000.00 275,000.00
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year hereinabove first written.
WITNESS OUR HANDS AND SEALS.
ARTIST: BY:
ANTRA MUSIC GROUP, INC. d/b/a
ANTRA MUSIC GROUP
COMPANY" /s/ Irina Perez
---------------------------------
By:/s/ Joseph A. Marrone Irina Perez, p/k/a "MING XIA"
---------------------------- and also p/k/a "Agent 99"
signature
Title: CEO
------------------------- /s/ Booker Tucker
DULY AUTHORIZED REPRESENTATIVE ---------------------------------
Booker Tucker, p/k/a "Mista Booka"
/s/ Joseph Davis Soc. Sec. #: ###-##-####
- -------------------------------
Joseph Davis,p/k/a"JD/Vengence" /s/ Chenjerai Kumanyika
----------------------------------
Chenjerai Kumanyika, p/k/a "Hypno"
and also p/k/a "Mista Chenjerai"
/s/ Jerel Spruill
- -------------------------------
Jerel Spruill, p/k/a "Gee" and
also p/k/a "Killahaha"/"Water Water"
-35-
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EXHIBIT "A"
To Agreement dated ____________________________, by and between Antra Music
Group' INC. -with- Five (5) Individuals p/k/a "SPOOKS"
WRITER ROYALTY GUIDELINES
a) Eight cents (8 cents) per copy for each regular piano copy which is
sold in the United States and Canada for which Publisher has received payment
in the United States.
b) Ten percent (10%) of the wholesale selling price for each copy of
orchestrations and all other arrangements including vocal scores and
instrumental arrangements of the Recorded Compositions, issued by Publisher and
sold in the United States and Canada for which Publisher has received payment
in the United States.
c) A fraction of ten percent (10%) of the wholesale selling price of
each composite work issued by Publisher, containing Recorded Compositions, sold
in the United States and Canada for which Publisher has received payment in the
United States. The numerator of said fraction shall be the number of Recorded
Compositions contained in such composite work, and the denominator thereof shall
be the total number of musical compositions contained therein.
d) Fifty percent (50%) of the sums actually received by Publisher in
the United States under any mechanical, transcriptions and synchronization
licenses for uses of the Recorded Compositions in the United States and Canada.
e) Subject to paragraphs (j) and (k) of this Schedule, fifty percent
(50%) of the sums actually received by Publisher in the United States from
sub-publishers in countries outside of the United States and Canada with respect
to uses of Recorded Compositions.
f) Fifty percent (50%) of the sums actually received by Publisher in
the United States from Publisher's licensees deriving from the exploitation in
the United States and Canada by
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Publisher's licensees of Recorded Compositions in any of the forms specified in
paragraphs (b) and (c) of this Schedule.
g) Fifty percent (50%) of the sums actually received by Publisher in
the United States from uses of Recorded Compositions within and outside of the
United States and Canada from any other resources now known or hereafter coming
into existence: not specifically provided for herein.
h) No royalty shall be payable for promotional material not sold or
re-sold.
i) If any copies for which royalties have been paid are returned to
Publisher, royalties so paid shall be credited to Publisher and allowed on the
next statement.
j) Writer shall not be entitled to receive any part of the fees
collected or received by Publisher through or from any performing rights society
for uses within, and outside of, the United States in instances where only the
publisher's share of royalties or receipts is paid to Publisher.
k) In no event shall Writer be entitled to share in any advance
payments, guarantee payments or minimum royalty payments which Publisher may
receive in connection with any subpublishing agreement, collection agreement,
licensing agreement or other agreement covering any of the Composition.
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EXHIBIT "B" to the Agreement dated ________________ by and between ANTRA
MUSIC GROUP, INC. with Five (5) Individuals p/k/a "SPOOKS"
THIS LETTER AGREEMENT MUST BE COMPLETED AND SIGNED BY EACH PERSON (OTHER THAN
ARTIST) PERFORMING AS A PRODUCER, CO-PRODUCER, MIXER, ENGINEER, VOCALIST,
MUSICIAN OR IN ANY OTHER CAPACITY IN CONNECTION WITH RECORDINGS MADE UNDER
THE AGREEMENT TO WHICH THIS EXHIBIT "B" IS ATTACHED.
ANTRA MUSIC GROUP INC.
1515 Locust St.,
Phila., PA 19102
Dated: ________________________, 19__
[NAME AND ADDRESS]
To:____________________
Dear __________________
We have entered into an Exclusive Recording Agreement (the "Recording
Agreement") with "SPOOKS" ("Artist"). You have advised us that pursuant to an
agreement between you and Artist, Artist is entitled to your services as more
particularly set forth below.
Artist has advised us that you have performed and may continue to
perform in certain capacities including, but not limited to as a producer,
co-producer, mixer, engineer, vocalist, musician and/or consultant with respect
to certain master recordings (the "Masters") and as a writer and/or composer of
certain musical compositions to be embodied on phonograph records containing
Artist's recorded performances.
We hereby accede to your involvement with respect to such phonograph
record projects provided, however, that in consideration
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of our approval relating to such involvement, and as an inducement for us to do
so, you hereby confirm, warrant and guaranty to us:
1. (a) That Artist has the right, insofar as you are concerned, to
enter into the Recording Agreement and to assume all of the obligations,
warranties and undertakings to us on the part of Artist therein contained, and
that Artist will continue to have such rights until the said obligations,
warranties and undertakings have been fully performed and discharged.
All of the warranties and representations on the part of
Artist contained in the Recording Agreement concerning you are true and correct
insofar as you are concerned.
You will duly and to the best of your ability, perform and
discharge all of the obligations and undertakings of the Recording Agreement
insofar as same are required of you and which Artist has undertaken to procure
you to do so and perform in the Recording Agreement.
If during the term of the Recording Agreement or any extension
thereof, Artist shall cease to be entitled to make your services available to us
in accordance with the terms of the Recording Agreement or fails or refuses to
make your services available to us, you shall, at our request, do all such acts
and things as shall give us the same rights, privileges and benefits as we would
have had under the Recording Agreement if Artist had continued to make same
available to us, and we shall be entitled to enforce such rights, privileges and
benefits directly against you.
You hereby consent and agree that we may, in our own name,
institute any action or proceeding against you to enforce our rights under the
Recording Agreement and/or pursuant hereto. (f) No termination of your agreement
with Artist shall cause to diminish your liability and obligation to us pursuant
to the Recording Agreement.
We shall own all right, title and interest, including the copyright in
and to the Masters which are produced, co-produced, mixed, re-mixed, engineered
and/or edited by you or which contain your recorded performance(s) including,
but not limited to your performances as a musician and/or vocalist and we shall,
in connection therewith, be entitled to exploit the Masters in all
configurations in all media throughout the universe, in perpetuity, as we or our
licenses, in our sole discretion may determine.
We shall have the exclusive right to use and publish and to permit
others to use and publish your name, likeness,
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biographical material or other identification for or in connection with the
recording or exploitation of phonograph records embodying the Masters throughout
the world.
4. You shall not enter into or authorize any third party to enter into
any agreements on our behalf or incur, directly or indirectly, any liability or
expense of any kind for which we are or may be held liable, in connection with
any recording session or otherwise in connection with the production of the
Masters.
5. In the event that any Master(s) shall contain a musical composition,
or any part thereof, which is written or composed, in whole or in part by you or
owned or controlled directly or indirectly by you or by any person, firm or
corporation with which you are or may be associated or affiliated, than you
agree that with respect thereto, you shall and do hereby assign to our
publishing designee and its successors, and assigns, an undivided fifty percent
(50%) of your interest in and to the copyright and all other rights therein and
thereto. You warrant and represent that in no event shall your interest in and
to the copyright of any musical composition referred to above be less than the
percentage equal to your distribution as a writer and/or composer thereof. You
further, agree that all rights in such composition(s) shall be administered
exclusively by our publishing designee in accordance the terms and conditions of
the Recording Agreement.
6. You shall execute and deliver to us and/or our publishing affiliate
such documents and instruments with respect to the Masters and musical
compositions hereunder which we may in our sole judgment deem necessary or
desirable to effectuate the intent and purposes of this agreement or to evidence
the rights granted herein. If you fail or are unable to execute any document or
instrument consistent with the terms hereof, we shall be fully entitled to do so
on your behalf as your true and lawful attorney, and such agreement, document or
instrument thereupon will be fully as valid, effective and operative as if
personally executed by you. The foregoing power is acknowledged by you to be
coupled with an interest and to be irrevocable. Prior to the recording, in each
instance, of any Master embodying a musical composition described in paragraph 5
above, you shall complete, execute and deliver to us a copyright assignment in
the form annexed hereto as Exhibit ?1? and made a part hereof.
7. You hereby represent and warrant that you have the right and
authority to make and enter into this agreement and that neither
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your services nor the results or proceeds thereof will violate or infringe upon
the copyright or other rights of any third party. You shall indemnify and hold
us and our publishing affiliate harmless from any and all claims, damages or
expenses (including court costs and reasonable counsel fees) arising out of or
in connection with any claim which is inconsistent with the warranties and
representations contained herein. You hereby warrant and represent that you have
read and are familiar with the terms and conditions of the Recording Agreement
and that you have obtained independent legal counsel with respect to the
Recording Agreement and also with respect to this agreement.
You agree that you will not, for a period of Five (5) years after the
expiration of the Recording Agreement, perform the musical compositions or
material contained on any record referred to herein for anyone else for the
purpose of making phonograph records, or Two (2) years after delivery thereof,
whichever period is greater.
9. You shall look solely to Artist for any and all payments due in
connection with any and all of your services or rights granted hereunder, even
if Antra MusicGroup, Inc. (hereinafter referred to as Company suspend its
obligations to account to and/or pay royalties or other sums to Artist,
including, but not limited to, monies payable to you pursuant to paragraph 5
hereof. You hereby release and discharge Antra Music Group, Inc. and its
officers, principals, heirs, executors, administrators, successors and assigns
from all actions, suits, debts, dues, sums of money, accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions, claims and
demands whatsoever, whether or not reflected in demand letters, in law,
admiralty or equity, which against Antra MusicGroup, Inc. and its respective
heirs, executors, administrators, successors and assigns you ever had, now have,
or hereafter can, shall or may, have for, upon, or by reason of any matter,
cause or thing whatsoever from the beginning of the world and continuing in
perpetuity relating to the copyrights and all other rights in and to the Masters
and musical compositions embodied therein. Without limitation of the foregoing,
in the event that Company elects to suspend its obligations to Artist, Company
shall have no obligation to you and no such suspension shall affect the validity
or enforceability of this agreement.
10. If any part of this agreement shall be invalid or unenforceable it
shall not affect the validity of the balance of this agreement. This agreement
may be executed in one or more counterparts, each of which shall be deemed an
original, but all of which must be executed by Publisher to be effective and all
of which together shall constitute one and the same instrument.
11. Nothing contained in this letter shall be construed as an
amendment, modification or revision of the Recording Agreement which is hereby
specifically ratified and affirmed.
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If the foregoing correctly reflects the understanding between you and
us with respect to the subject matter hereof, kindly indicate .your agreement
thereto by signing your name in the space provided below.
Very truly yours,
ANTRA MUSIC GROUP , INC.
By: /s/ Joseph A. Marrone CEO
-------------------------------
ACCEPTED AND AGREED TO,
INDIVIDUALLY AND ON BEHALF
OF MY PUBLISHING DESIGNEE
/s/ IRINA PEREZ
- ---------------------------
IRINA PEREZ
/s/ BOOKER TUCKER
- ---------------------------
BOOKER TUCKER
/s/ JOSEPH DAVIS
- ---------------------------
JOSEPH DAVIS
/s/ CHENJERAI KUMANYIKA
- ---------------------------
CHENJERAI KUMANYIKA
/s/ JEREL SPRUILL
- ---------------------------
JEREL SPRUILL
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THIS EXHIBIT "1" is part of the letter to the Agreement marked as Exhibit "B" to
the Agreement dated ___________________ __, 1999 by and between ANTRA MUSIC
GROUP, INC. with Five (5) Individuals p/k/a "SPOOKS".
TRANSFER OF COPYRIGHT - LPs 1 through 3
and all singles recorded during that period
For good and valuable consideration, receipt of which is hereby
acknowledged, the undersigned hereby transfers to the publishing designee of
AntraMusicGroup, Inc. an undivided one-half (1/2) and to the publishing designee
of "SPOOKS" an undivided one-half (1/2) of all right, title and interest in and
to the copyright and to the publishing designee of ANTRA MUSIC GROUP, Inc. one
hundred percent (100%) of the exclusive administration rights comprised in the
copyright, without limitation, in the musical composition(s) listed below:
TITLE WRITER(S)
"____________________" ________________ - ________________
(fill in percentage of writer's
contribution)
Dated: __________________ , 199_
________________________________
[Your Name]
[Need Not Be Signed if You
Are Not A Writer]
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THIS EXHIBIT "1" is part of the letter to the Agreement marked as Exhibit "B" to
the Agreement dated ___________________ __, 1999 by and between ANTRA MUSIC
GROUP, INC. with Five (5) Individuals p/k/a "SPOOKS".
TRANSFER OF COPYRIGHT - LPs 4 through 6
and all singles recorded during that period
For good and valuable consideration, receipt of which is hereby
acknowledged, the undersigned hereby transfers to the publishing designee of
AntraMusicGroup, Inc. an undivided Forty Per Cent (40%) and to the publishing
designee of "SPOOKS" an undivided Sixty Per Cent (60%) of all right, title and
interest in and to the copyright and to the publishing designee of
AntraMusicGroup, Inc. one hundred percent (100%) of the exclusive administration
rights comprised in the copyright, without limitation, in the musical
composition(s) listed below:
TITLE WRITER(S)
"____________________" _________________ - ______________
(fill in percentage of writer's
contribution)
Dated: __________________ , 199_
________________________________
[Your Name]
[Need Not Be Signed if You
Are Not A Writer]
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EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
Ownership Jurisdiction
Name of Subsidiary Percentage Where Organized
- ------------------ ---------- ---------------
Antra Music Group, Inc. ........ 100% New Jersey
Antra Publishing, Inc. ......... 100% Pennsylvania
Recordstogo.com................. 50% Delaware
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Exhibit 23.1
Liebman Goldberg & Drogin, LLP
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion of our report dated May 26, 1999 with respect
to Antra Holdings Group, Inc. for the year ended December 31, 1998 in this
Registration Statement on Form SB-2 and to the reference to our firm under the
caption "Experts" in the Prospectus.
/s/ Liebman Goldberg & Drogin, LLP
Liebman Goldberg & Drogin, LLP
Garden City, New York
November 18, 1999
