AGREEMENT
THIS AGREEMENT IS MADE AS OF THE 8TH DAY OF JULY 1997 BY AND
BETWEEN PLANET ENTERTAINMENT CORP. (PLANET), 000 XXXXXXX00,
XXXXXXXXXX, XX 00000 AND NIPPON COLUMBIA CO. LTD. (NCC) OF
14-14. XXXXXXX 0-XXXXX, XXXXXX-XX, XXXXX 00, XXXXX
BOTH PARTIES THERETO HEREBY AGREE AS FOLLOWS:
1.
PLANET HEREBY GRANTS THE EXCLUSIVE RIGHT TO PRESS, DUPLICATE,
DISTRIBUTE, SELL, AND MARKET MUSIC CD's AND VIDEOTAPES, AND TO
SUBLICENSE SUCH GRANTED RIGHT TO NCC AND ITS SUBSIDIARY, DENON ACTIVE
MEDIA ("DAM"), A DIVISION OF DENON CORPORATION U.S.A. FOR THE TERRITORY
DEFINED BELOW UNDER THE FOLLOWING TERMS AND CONDITIONS:
A.
TERRITORY: JAPAN, HONG KONG, TAIWAN, KOREA, AND SINGAPORE, (HEREIN
CALLED THE LICENSED TERRITORY)
B.
TERM: ONE (1) YEAR COMMENCING SEPT. 1, 1997, FURTHERMORE, IN THE EVENT
THAT TOTAL AMOUNT OF ROYALTIES AND PRODUCT PRICES PAYABLE BY NCC TO
PLANET UNDER SUBPARAGRAPH C BELOW EXCEEDS TWO HUNDRED FIFTY THOUSAND
DOLLARS (US $250,000) AS OF AUGUST 31, 1998, THE TERM OF THIS AGREEMENT
SHALL AUTOMATICALLY BE EXTENDED WITH NO FURTHER ADVANCE PAYMENT FOR A
PERIOD OF ONE (1) YEAR THEREAFTER OR UPON MUTUAL AGREEMENT. WHEN THE
TERM OF THIS AGREEMENT EXPIRES, NCC SHALL HAVE A SIX-MONTH SELL-OFF
PERIOD.
C.
ROYALTY & PRODUCT PRICE: NCC OR DAM SHALL PAY A PER-UNIT PRICE LISTED
IN SCHEDULE A. IF A MECHANICAL RIGHTS COST (CURRENTLY $.0695 PER SONG)
INCREASES OR DECREASES, THE PRICE FOR NAKED CD AND FINISHED GOODS WILL
INCREASE OR DECREASE PROPORTIONATELY.
D.
BROADCAST RIGHT: NCC SHALL HAVE THE RIGHT TO SUBLICENSE MOVIES AND
MUSIC VIDEOS SUBJECT TO PRICE NEGOTIATION BY PLANET AND NCC.
E.
ACCOUNTING: WITH RESPECT TO THE PER-UNIT LICENSE ROYALTIES OR FINISHED
GOODS SET FORTH ABOVE, NCC SHALL ACCOUNT TO PLANET QUARTERLY WITH
DETAILED ROYALTY REPORTS ACCOMPANIED BY PAYMENTS WITHIN SIXTY (60) DAYS
OF CLOSE OF EACH QUARTERLY PERIOD ENDING ON MARCH 31, JUNE 30,
SEPTEMBER 30, AND DECEMBER 31, OF EACH YEAR.
F.
PAYMENT: ALL ROYALTIES AND OTHER PAYMENTS HEREUNDER SHALL BE MADE BY
NCC TO PLANET IN UNITED STATES DOLLARS IN THE UNITED STATES. IN
DETERMINING THE AMOUNT OF U.S. DOLLARS TO BE PAID HEREUNDER, THE
CURRENCY OF THE LICENSED TERRITORY SHALL BE CONVERTED TO U.S. DOLLARS
AT THE RATE OF EXCHANGE PREVAILING ON THE DATE OF DEPOSIT BY NCC AT ITS
BANK IN THE LICENSED TERRITORY FOR REMITTANCE TO PLANET. SUCH DEPOSIT
SHALL BE MADE ON OR BEFORE THE
DATE WHEN ANY PAYMENT IS DUE HEREUNDER AND NCC SHALL ADVISE PLANET WHEN
SUCH DEPOSIT MADE WITHOUT PREJUDICE TO PLANET'S RIGHTS IN THE EVENT OF
NCC'S FAILURE TO MAKE TIMELY PAYMENT OF ALL SUMS DUE HEREUNDER, WHICH
OBLIGATIONS IS OF THE ESSENCE OF THIS AGREEMENT ALL PAYMENTS TO BE MADE
HEREUNDER SHALL BEAR INTEREST IN THE FAVOR OF PLANET AT THE RATE OF
(1%) PERCENT PER ANNUM ABOVE THE PRIME RATE PREVAILING IN THE UNITED
STATES AT AT THE TIME WHEN SUCH PAYMENT IS DUE, PAYABLE MONTHLY
COMMENCING THIRTY (30) DAYS AFTER THE DUE DATE UNTIL PAYMENT IN FULL IS
DEPOSITED BY NCC WITH ITS BANK IN THE LICENSED TERRITORY FOR REMITTANCE
TO PLANET.
G.
ADVANCE: ON SIGNING THIS AGREEMENT, NCC WILL PAY PLANET AN ADVANCE OF
ONE HUNDRED FIFTY THOUSAND DOLLARS (US $150,000), PAYABLE ON SIGNING
THIS AGREEMENT. THIS ADVANCE WILL BE RECOUPABLE AGAINST ANY FUTURE
AUDIO AND VIDEO SALES DUE PLANET INCLUDING ALL ITEMS LISTED ON SCHEDULE
A.
H.
TARGET: NCC WILL MAKE EVERY POSSIBLE EFFORT TO ACCOMPLISH THE TARGET
SALE AS SUMMARIZED IN SCHEDULE A. IT IS ACKNOWLEDGED THAT PLANET WILL
BE SUBMITTING A MAXIMUM OF 15 AUDIO CD's PER MONTH, AND AT LEAST 2
MOVIE TITLES AND 2 MUSIC VIDEO TITLES TO NCC. PLANET AND NCC WILL
EVALUATE AUDIO AND VIDEO TARGET SALES AT THE END OF THE SIXTH MONTHS
(FEBRUARY 28, 1998)
I.
IT IS UNDERSTOOD THAT PLANET WILL BE SUBJECT TO INTERNATIONAL TAX.
J.
NCC WILL RELEASE VIDEO PRODUCTS FOR PLANET TO DISTRIBUTE IN THE USA
UNDER THE PLANET NAME.
2. PLANET WARRANTIES:
A.
PLANET WARRANTS THAT IT HAS THE RIGHT TO CONTROL, LICENSE AND
DISTRIBUTE SAID PRODUCTS; AND
B.
PLANET WARRANTS THAT ALL PRODUCTS PURCHASED BY NCC OR DAM FROM PLANET
HEREUNDER SHALL BE FREE OR ALL ENCUMBRANCES AND OBLIGATIONS INCLUDING
ALL ARTIST ROYALTIES ARISING OUT OF THE USE, DISTRIBUTION AND SALE OF
SAID FINISHED PLANET PRODUCTS HEREUNDER. PLANET ALSO WARRANTS THAT ALL
PRODUCTS MANUFACTURED AND SOLD BY NCC, DAM AND/OR THEIR SUBLICENSES
UNDER THIS AGREEMENT SHALL BE FREE OF OBLIGATION TO ANY ARTIST
ROYALTIES.
C.
WITH RESPECT TO COPYRIGHTED MUSIC CONTAINED IN THE PLANET PRODUCT
PURCHASE BY NCC AND/OR DAM HEREUNDER, PLANET WARRANTS THAT PLANET HAS
SECURED ALL MECHANICAL AND/OR SYNCHRONIZATION LICENSES FROM COPYRIGHT
PROPRIETORS OR THEIR AGENTS. FOR EACH VIDEO TITLE CHOSEN FOR
MANUFACTURE, DISTRIBUTION, AND SALE BY NCC OR IT'S SUBLICENSEES IN THE
TERRITORY, PLANET WILL SECURE SYNCHRONIZATION LICENSE AND PROVIDE PROOF
OF PROPER LICENSE IN EACH TERRITORY. NCC WILL BE RESPONSIBLE FOR ALL
MECHANICAL LICENSE PAYMENTS FOR PRODUCT MANUFACTURED BY NCC AND/OR ITS
SUBLICENSEES OUTSIDE THE UNITED STATES.
3.
NCC'S WARRANTIES
NCC WARRANTS THAT NCC SHALL USE ITS BEST EFFORTS TO DISTRIBUTE, SELL
AND OTHER WISE EXPLOITE PLANET PRODUCTION IN THE TERRITORY HEREUNDER
AND HAS THE FULL DISTRIBUTION AND MARKETING CAPABILITY IN THE LICENSED
TERRITORY.
4.
PRICE TO CONSUMERS: NCC OR DAM SHALL MAKE ALL PLANET MUSIC CD's
AVAILABLE TO THE GENERAL PUBLIC IN THE TERRITORY AT "MID-LINE" PRICES
HEREIN DEFINED AS PRICES WHICH ARE LESS THAN 30 (30%) OF NORMAL RETAIL
PRICES FOR S0-CALLED "TOP LINE" CD's IN THE TERRITORY. NCC WILL NOTIFY
PLANET OF THE PRICE TO CONSUMERS FOR VIDEOTAPES IN THE LICENSED
TERRITORY NO LATER THAN 90 DAYS BEFORE RELEASE.
5.
SELL-OFF PERIOD: NCC AND DAM HAVE, FOR A PERIOD OF SIX (6) MONTHS
COMMENCING UPON THE DATE OF EXPIRATION OR TERMINATION OF THE TERM OF
THIS AGREEMENT, THE NON-EXCLUSIVE RIGHT TO SELL OFF THEIR EXISTING
INVENTORY.
6.
SAMPLE: FOR EACH TITLE OF PLANET PRODUCTS WHICH NCC WILL BE INTERESTED
TO DISTRIBUTE IN THE TERRITORY, PLANET AGREES TO DELIVER TO NCC, FREE
OF CHARGE, TWO (2) UNITS PER COUNTRY OF THE TERRITORY IN WHICH
DISTRIBUTION OF SUCH TITLE WELL BE CONTEMPLATED.
7.
ASSIGNMENT: NO RIGHT OR OBLIGATION OF EITHER PARTY TO THE AGREEMENT MAY
BE ASSIGNED OR DELEGATED IN WHOLE OR IN PART, TO ANY THIRD PERSON OR
ENTITY WITHOUT THE PRIOR WRITTEN CONSENT OF THE PARTY HERETO.
8.
GOVERNING LAW: THIS AGREEMENT SHALL BE GOVERNED BY AND UNDER THE LAWS
OF THE STATE OF NEW JERSEY AND THE UNITED STATES OF AMERICA.
THE PARTIES HERETO EXECUTE THIS AGREEMENT BY SIGNING BELOW AS OF
THIS DAY AND YEAR FIRST ABOVE WRITTEN.
PLANET ENTERTAINMENT CORP. NIPPON COLUMBIA CO; LTD.
/s/ Xxxxxx Xxxxxxx /s/ T. Anazawd
----------------------------- -----------------------------
Xxxxxx Xxxxxxx
President
DATE 7/8/97 DATE July 8th, 1997
SCHEDULE A
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Music/Video CATEGORY UNIT PRICE TARGET SALES ADVANCE
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MUSIC ROYALTY 10,000 Units $150,000 Advance
(manufactured per Month for for 1st Year.
outside USA) no Music Royalty, recoupable by audio
mechanical Naked CD, and and video production
right fee $1.00/CD Finished payable on signing
Product contract.
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MUSIC NAKED CD
With
mechanical
right fee $2.20/CD
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MUSIC
FINISHED
GOODS With $4.20/CD
mechanical
Right fee
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VIDEO
At Least 2
$3.00/Unit Movies
(DVD, VHS, (12,000)
ETC) Units
$1.25/UNIT
(Video CD)
$1.25/UNIT
ROYALTY (Public
FOR MOVIE Domain)
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VIDEO At least 2
$2.50/Unit Music Videos
(DVD, VHS, (5,000) Units
ROYALTY ETC)
FOR MUSIC $1.25/Unit
VIDEO (Video CD)
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VIDEO $250-$10,000 At least 3
Depends on title Times of
BROAD and number of Broadcasting
CAST FEE viewers. for videos.
FOR MOVIE Memorandum
AND MUSIC for each title is
VIDEO required.
(including
small CATV
stations)
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