PUSH
RECORDS
December 8, 1997
Xxxxx Xxxx and Xxxxx X. Xxxxxx
c/o Xxxx Xxxxxx
Rebel Music
00000 Xxxx Xxxx.
Los Angeles, CA 90064
Re: Push Records w/ Xxxxx Xxxx and Xxxxx X. Xxxxxx
p/k/a KIDNEY THIEVES
Dear Xx. Xxxxxx and Ms. Xxxx,
This letter shall supersede all letters or other communications by and
between the parties hereto (including without limitation, by and between their
respective agents, attorneys and so forth) prior to the above date regarding the
subject matter hereof, and shall confirm the material terms of the worldwide
exclusive recording agreement reached between you Xxxxx Xxxx and Xxxxx X. Xxxxxx
p/k/a Kidney Thieves ("you" or "Artist") and Push Records, Inc.( "Company"). The
terms outlined below are binding as a complete agreement until such time, if
any, as a full and more formal agreement has been fully executed.
1. Term and Product Commitment: Initial term is two (2) records firm.
2. Options: Three (3) separate options. The first option is for one record. The
second option is for two records firm. The third option is for one record for a
potential total (including the initial period and all options) of six (6)
records.
3. Territory: The world.
4. Delivery: LP 1 shall be delivered no later than four (4) months after date of
agreement. Each LP shall be released in the U.S. within one hundred and twenty
(120) days after delivery and acceptance by Company. Foreign release shall be
within one hundred eighty (180) days after the U.S. release. Each subsequent LP
is to be delivered no earlier than ten (10) and no later than eighteen (18)
months following delivery of the prior LP.
5. Advances/Funds: (a) The fund (including mastering and all recording costs)
for LP 1 is One Hundred Thousand Dollars ($100,000) one third of which will be
paid to Artist upon the full execution of this letter agreement with the balance
of the fund to be available upon the commencement of recording. The fund will be
administered by PUSH. The balance of the fund will be paid to Artist after
deducting all recording costs.
Xxxx Xxxxxx
December 8, 1997
page 2
(b) The recording fund for LP 2 and subsequent LPs including all options, is
based upon a formula of three fourths of royalties earned by Artist on net sales
at U.S.N.R.C. for the immediately prior album, with a maximum reserve of fifteen
(15%) percent, calculated as of the earlier of the date of delivery of the
subject album or twelve (12) months after release of the prior LP with the
following minimums and maximums:
Record # Minimum Maximum
-------- ------- -------
2 $100,000 $200,000
3 $150,000 $300,000
4 $175,000 $350,000
5 $200,000 $400,000
6 $250,000 $500,000
(c) KIDNEY THIEVES shall have the right to administer the Funds for any LP
subsequent to the first LP, which will be payable one half (1/2) on commencement
of recording; one quarter (1/4) on completion of tracking; and one quarter (1/4)
on delivery and acceptance.
5A. MINIMUM COMPENSATION
(a) Company will pay to you compensation aggregating not less than the
amount indicated below with respect to the applicable Fiscal Year (as defined
below):
Fiscal Year Amount
----------- ------
First $9,000
Second $12,000
Third $15,000
Fourth $15,000
Fifth $15,000
Sixth $15,000
Seventh $15,000
"Fiscal Year," in this paragraph, means the annual period beginning on the date
of commencement of the term of this Agreement, and each subsequent annual period
during the continuance of that term beginning on the anniversary of that
commencement date.
(b) If you have not been paid compensation of at least the amount
indicated above with respect to a particular Fiscal Year in connection with your
services under this Agreement, Company will pay the amount of such deficiency
directly to you before the end of that Fiscal Year. At least forty (40) days
before the end of each Fiscal Year you will notify Company if you have not been
paid compensation of at least the amount indicated above with respect to a
particular Fiscal Year in connection with your services, and of the amount of
such deficiency. Company will have the right to make any such payments at our
election if Company determines, in Company's sole discretion, that Company lacks
sufficient information to deem itself assured to have complied with subparagraph
5A(a). Each such payment made by Company will constitute an Advance
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December 8, 1997
page 3
and will be applied in reduction of any and all monies subsequently becoming due
to you under this Agreement. Company may not withhold or require you to repay
any such payment under any other provision of this Agreement. If the term of
this Agreement ends before the last day of a Fiscal Year, the applicable sum
referred to in subparagraph 5A(a) and the first sentence of this subparagraph
(b) will be reduced proportionally for the purpose of computing the payment to
be made under this paragraph for the Fiscal Year.
(c) You acknowledge that this paragraph is included to avoid compromise of
Company's rights (including Company's entitlement to injunctive relief) by
reason of a finding of applicability of California law, but does not constitute
a concession by Company that California law is actually applicable.
6. Royalties: Paid on one hundred percent (100%) of sales of top line product at
USNRC. "All in" rate is based upon suggested retail list price (SRLP) for top
line product less container charge of twenty five percent (25%) for CDs and
twenty percent (20) for cassettes running sixty (60) minutes or less.
(a) U.S. Royalty Rates
Record # Basic Royalty Rate
-------- ------------------
1 & 2 16%
3 & 4 16.5%
5 & 6 17%
(b) The foreign royalty rate (the "Foreign Rate") on Net Sales of Top-Line
Records (other than Audiovisual Records) sold for distribution through normal
retail channels in territories outside the United States by Company or its
Principal Licensee shall equal one half (1/2) of Company's net receipts paid to
Company by its licensee(s).
(c) Audiovisual royalties: In U.S. on Net Sales of Top Line - 18%; foreign
rate -14%; 50% of Video Net Receipts where sold by a third party licensee.
Commercial exploitation(s) of videos shall require the prior written consent of
Artist.
Royalty rates for USNRC net sales for each record will escalate,
prospectively, one half (1/2 %) percent upon USNRC net sales of the applicable
record reaching five hundred thousand (500,000) units and an additional one-half
(1/2%) percent upon USNRC net sales reaching one million (1,000,000) units.
Subsequent record rates will be no lower than the highest rate of the previous
record. Compact disc rate is eighty seven and one-half percent (87.5%) of basic
royalty. Customary free goods not to exceed twenty percent (20%) for LPs and
twenty-three (23%) for singles. Company shall have the right to offer special
free goods up to an additional ten (10%) percent.
Xxxx Xxxxxx
December 8, 1997
page 4
Reduced rates apply for, mid price (18 month holdback), budget (24 month
holdback), cut outs, clubs, PX, etc.
6A. ACCOUNTING.
(a) Statements as to royalties payable hereunder shall be sent by Company
to you within ninety (90) days after the expiration of each semi annual period
for the preceding semi annual period ending the last fiscal day of June or
December. Notwithstanding the foregoing, Company may, if Company elects, change
the aforesaid time and dates, provided, however, in the event of such change,
statements shall be rendered to you no less frequently than semi-annually.
Notice of such change shall be provided with the first accounting sent pursuant
to the changed time and dates. Concurrently with the rendition of each
statement, Company shall pay you all royalties shown to be due by such
statement, after deducting all Recording Costs paid by Company, all payments
made therefor to or on behalf of you and Artist, and all Advances made to you
and Artist prior to the rendition of the statement.. Company may maintain
reasonable reserves; each such royalty reserve shall be liquidated evenly over
the next four semi-annual accounting periods following the accounting period in
which it is established. Company shall not establish any royalty reserve during
any particular accounting period: (i) with respect to Albums in excess of thirty
percent (30%), or (ii) with respect to Singles, Maxi-Singles, and EPs in excess
of forty percent (40%), of the aggregate number of Albums or Singles, or
Maxi-Singles, or EPs, as the case may be, shipped to Company's customers, unless
Company's distributor requires a reserve larger than the aforesaid limits in
which case Company may increase the reserve hereunder only by the amount that
Company's distributor actually increases the reserve rate. You shall be deemed
to have consented to all accountings rendered by Company hereunder and said
accountings shall be binding upon you and not subject to any objection by you
for any reason unless specific objection, in writing, stating the basis thereof
is given to Company within two (2) years after the date Company is deemed to
have rendered the applicable statement, and after such written objection, unless
suit is instituted within three (3) years after the date Company is deemed to
have rendered the applicable statement. Company shall be deemed to have rendered
you each statement on the date prescribed in this paragraph 6(a) unless you
notify Company otherwise with respect to any particular statement within ninety
(90) days after the date that Company has failed to render that statement.
(b) You shall have the right at your sole cost and expense to appoint a
Certified Public Accountant or other qualified individual with experience in
record industry audits, who is not then currently engaged in an outstanding
audit of Company to examine Books and Records as same pertain to sales of
Records subject hereto as to which royalties are payable hereunder, provided
that any such examination shall be for a
Xxxx Xxxxxx
December 8, 1997
page 5
reasonable duration, shall take place at Company's offices during normal
business hours on reasonable prior written notice and shall not occur more than
once in any calendar year. You may examine Books and Records with respect to a
particular statement only once.
7. Mechanical Royalties: For compositions written or controlled by KIDNEY
THIEVES, PUSH will pay seventy-five (75%) of the U.S. minimum statutory rate in
the U.S. at the time of release on record royalty bearing net sales not to
exceed eleven (11) times the U.S. minimum statutory rate for LP's, five (5)
times for Eps, three (3) times for 12" singles and two (2) times for 7" singles.
For USNRC Net Sales in excess of Five Hundred Thousand (500,000) units RECORD
COMPANY will pay eighty-seven and one half percent (87-1/2%) of the U.S. minimum
statutory rate. For USNRC Net Sales in excess of One Million (1,000,000) units
RECORD COMPANY will pay ninety-two and one half percent (92-1/2%) of the U.S.
minimum statutory rate. For USNRC Net Sales in excess of One Million Five
Hundred Thousand (1,500,000) units RECORD COMPANY will pay one hundred percent
(100%) of the U.S. minimum statutory rate.
In the event that any single, maxi-single, EP or LP contains other
Compositions in addition to Controlled Compositions and the aggregate mechanical
royalty rate for said single, maxi-single, EP or LP exceeds the applicable
maximum aggregate mechanical royalty rate provided above for Controlled
Compositions, the aggregate mechanical royalty rate for the Controlled
Compositions contained thereon shall be reduced by the aforesaid excess over
said applicable rate. Additionally, Company shall have the right with respect to
any single, maxi-single, EP or LP, the aggregate mechanical royalty rate for
which exceeds the applicable maximum aggregate mechanical royalty rate provided
above for Controlled Compositions, to deduct the excess payable thereon from all
royalties payable to you solely pursuant to this agreement. Mechanical royalty
payments on Records subsequently returned are considered overpayments.
8. Independent Promotion: Fifty (50%) percent of independent radio promotion
costs (not publicity or marketing) shall be deemed an advance.
9. Creative Control: Company and KIDNEY THIEVES shall mutually agree on all
material and producers and recording schedule. Company has budget approval
(deemed approved if within the fund). Delivery standard is commercially
satisfactory.
10. Album Artwork: KIDNEY THIEVES and Company will have the mutual right to
approve the design and execution of the artwork for all releases. XXXXXX XXXXXXX
will have the right to prepare LP artwork pursuant to non-recoupable budget of
twelve thousand five hundred dollars ($12,500) per LP.
11. Video: PUSH will produce one video in connection with each LP. Company and
Artist shall mutually select the director for each video produced hereunder.
Company will select, in consultation with KIDNEY THIEVES, creative elements,
budget and track selection of all videos. Fifty (50%) percent of video
production costs
Xxxx Xxxxxx
December 8, 1997
page 6
are recoupable from record royalties and one hundred (100%) percent of video
production costs are recoupable from video royalties. For purposes of clarity
recoupment of video production costs pursuant to this paragraph shall not exceed
100% of video production costs (no double recoupment).
12. Tour Support: PUSH agrees to provide tour deficit financing in connection
with at least one (1) U.S. tour for LPs 1 and 2, in the amount of TWENTY FIVE
THOUSAND DOLLARS ($25,000) for LP 1 AND TWENTY FIVE THOUSAND DOLLARS ($25,000)
for LP 2, subject to Company's reasonable approval of tour budgets, itinerary
and dates. The parties will negotiate in good faith regarding tour support for
tours for future LPs.
13. Marketing: Company shall consult with you in good faith in a meaningful
manner regarding marketing plans company intends to implement for the Album
concerned.
14. Marketing Restrictions: Company shall not, without KIDNEY THIEVES' approval
which shall not be unreasonably withheld:
(a) sell records hereunder as Premium Records
(b) remix, re-edit or resequence any masters which are delivered and
accepted by Company for commercial release
(c) release any demonstration recordings
(d) release any so-called "outtakes
(e) license any master for use or synchronization with television
commercials (other than to advertise the LPs made hereunder), motion
pictures, TV shows or home videos
(f) couple more than two masters with masters of other artists for
U.S. commercial release except with respect to promotional samplers.
15. Attorneys Fees: Upon full execution of a long form recording agreement
between Artist and Company, Company shall pay to King, Purtich, Xxxxxx, Xxxxxxx
& Xxxxxxxx, on behalf of Artist, up to Five Thousand ($5,000) Dollars for
attorneys fees actually billed to Artist by for the negotiation of the long form
agreement.
16. Ownership of Masters:
(a) All Recordings made or furnished to Company by you or "Artist" under
this agreement or during the Term from the inception of the recording thereof,
and all reproductions derived therefrom, together with the performances embodied
thereon, shall be the property of Company in perpetuity for the Territory free
from any claims whatsoever by you or "Artist" or any other person. Company shall
have the exclusive right throughout the Territory to copyright those Recordings
in Company's name as the author and owner of them and to secure any and all
renewals and extensions of copyright throughout the Territory. Each such
Recording shall be considered a "work made for hire" for Company; if any such
Recording is determined not to be a "work made for hire," it will be deemed
transferred to Company by this agreement, together with all
Xxxx Xxxxxx
December 8, 1997
page 7
rights in it. "Artist" hereby irrevocably and unconditionally waive any and all
moral and like rights that "Artist" has in the Recordings and in the
performances embodied therein and hereby agree not to make any claim against
Company or any person authorized by Company to exploit the Recordings based on
such moral or like rights. Without limiting the generality of the foregoing and
subject to the limitations in paragraph 14, Company and any Person authorized by
Company 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:
(i) to manufacture, advertise, sell, lease, license, distribute or
otherwise use, exploit or dispose of, in any or all fields of use by any method
now or hereafter known, Records embodying Masters;
(ii) to release Records derived from Masters under any name,
trademark or label which Company or its subsidiaries, affiliates or licensees
may from time to time elect;
(iii) to perform such Masters publicly and to permit public
performances thereof by means of radio broadcast, television or any other method
now or hereafter known; and
(iv) to reproduce, adapt, transmit, communicate or otherwise use
Masters, all upon such terms and conditions as Company may elect, or at its
discretion, to refrain therefrom.
17. WARRANTIES AND REPRESENTATIONS; INDEMNITIES
You warrant and represent that:
You have the right and legal capacity to enter into this agreement, and
you are not subject to any prior obligations or agreements, whether as a party
or otherwise, which would restrict or interfere in any way with the full and
prompt performance of your obligations hereunder, and you shall fully and
promptly perform your obligations hereunder.
Company shall not be required to make any payments of any nature for or in
connection with the acquisition, exercise or exploitation of any of Company's
rights hereunder, except as specifically provided in this agreement. You shall
be solely responsible for all royalties (except mechanical royalties as provided
herein) payable to producers, mixers, remixers and others contributing to the
recording of Masters engaged by you or with your consent and all mechanical
royalties in excess of the applicable rates and/or the applicable maximum
aggregate mechanical royalty rates.
Xxxx Xxxxxx
December 8, 1997
page 8
The Materials or any use thereof, as authorized hereunder, shall not
violate any law and shall not infringe upon or violate the rights of any Person
(including, without limitation, contractual rights, copyrights, rights of
publicity and rights or privacy) and that each track-by-track list identifying
the performers on each Master and describing their performances which you
furnish to Company is and shall be true, accurate and complete. "Materials," as
used in this subparagraph means: Masters hereunder (including any Sampled
Material embodied therein); all Controlled Compositions; each name used by
"Artist", individually or as a group, in connection with Masters hereunder; all
photographs and likenesses of "Artist"; and all other musical, dramatic,
artistic and literary materials, ideas, and other intellectual properties
furnished by you or "Artist", contained in or used in connection with any
Masters hereunder or their packaging, sale, distribution, advertising,
publicizing or other exploitation supplied by or approved by your or "Artist".
Company's acceptance and/or utilization of Masters, Materials, or track-by-track
lists hereunder shall not constitute a waiver of your representations,
warranties or agreements in respect thereof, or a waiver of any of Company's
rights or remedies.
You will insure that there will be delivered to Company all licenses
required under copyright for the recording of the musical compositions and any
other copyrighted material reproduced in the Recordings, and you will make all
payments (except mechanical royalties) required under those licenses;
The parties hereto agree to and do hereby indemnify, save and hold each
other harmless from any and all loss and damage (including court costs and
reasonable attorneys' fees) arising out of, connected with or as a result of any
third party claim resulting or derived from any inconsistency with, failure of,
or breach or threatened breach by you of any warranty, representation contained
in this agreement including, without limitation, any claim by any third party in
connection with the foregoing, which has resulted in a judgment against Company
or which has been settled with your consent, which consent shall not be
unreasonably withheld, it being agreed that such consent shall only be required
for settlements in excess of Five Thousand Dollars ($5,000.00). In addition to
any other rights or remedies Company may have by reason of any such
inconsistency, failure, breach, threatened breach or claim, Company may obtain
reimbursement from you, on demand, for any payment made by Company at any time
after the date hereof with respect to any loss, damage or liability (including
anticipated and actual court costs and reasonable attorneys' fees) resulting
therefrom. Such amounts may also be deducted from all monies becoming payable to
you by Company solely under this agreement to the extent to which they have not
been reimbursed to Company by you. If the amount of any such claim or loss has
not been determined, Company may withhold sums due you, except mechanical
royalties, in an amount consistent with such claim or loss pending such
determination unless you post a bond in a form and from a bonding company
acceptable to Company in an amount equal to Company's estimate of the amount of
the claim. Such withheld sums shall be released if suit is not filed within
Xxxx Xxxxxx
December 8, 1997
page 9
twelve (12) months after Company is notified of or receives a communication with
respect to such claim; provided, however, that if such claim is thereafter
asserted, Company shall maintain the right to begin once again to withhold
monies. Company shall give you notice of any third party claim to which the
foregoing indemnity applies and you shall have the right to participate in the
defense of any such claim through counsel of your own choice and at your
expense; provided that Company shall have the right at all times, in Company's
sole discretion, to retain or resume control of the conduct thereof. Company
shall have the right without your consent to assign this agreement in whole or
in part to any subsidiary, parent company, affiliate, or to any third party
acquiring a substantial portion of Company's assets or stock; provided, however,
that Company shall remain liable for all payments required to be made to you and
all other material obligations hereunder. You shall not have the right to assign
this agreement or any of your rights or obligations hereunder, except that you
may assign your right to receive royalties hereunder to an entity owned or
controlled by all members of "Artist".
THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF NEW YORK AND
ITS VALIDITY, CONSTRUCTION, PERFORMANCE AND BREACH SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE WHOLLY
PERFORMED THEREIN. THE PARTIES HERETO AGREE TO SUBMIT YOURSELF TO THE
JURISDICTION OF THE FEDERAL OR STATE COURTS LOCATED IN NEW YORK CITY IN ANY
ACTION WHICH MAY ARISE OUT OF THIS AGREEMENT AND SAID COURTS SHALL HAVE
EXCLUSIVE JURISDICTION OVER ALL DISPUTES BETWEEN COMPANY AND YOU OR "ARTIST"
PERTAINING TO THIS AGREEMENT AND ALL MATTERS RELATED THERETO. IN THIS REGARD,
ANY PROCESS IN ANY ACTION OR PROCEEDING COMMENCED IN THE COURTS OF THE STATE OF
NEW YORK ARISING OUT OF ANY CLAIM, DISPUTE OR DISAGREEMENT UNDER THIS AGREEMENT
MAY, AMONG OTHER METHODS, BE SERVED UPON THE PARTIES HERETO BY DELIVERING OR
MAILING THE SAME, VIA REGISTERED OR CERTIFIED MAIL, ADDRESSED TO THE RESPECTIVE
PARTIES AT THE ADDRESSES PROVIDED HEREIN FOR NOTICES; ANY SUCH DELIVERY OR MAIL
SERVICE SHALL BE DEEMED TO HAVE THE SAME FORCE AND EFFECT AS PERSONAL SERVICE
WITHIN THE STATE OF NEW YORK. NOTHING CONTAINED IN THIS SUBPARAGRAPH SHALL
PRECLUDE THE PARTIES HERETO FROM JOINING THE OTHER PARTY IN AN ACTION BROUGHT BY
A THIRD PARTY AGAINST EITHER PARTY IN ANY JURISDICTION, ALTHOUGH THE FAILURE TO
JOIN THE OTHER PARTY IN ANY SUCH ACTION IN ONE INSTANCE SHALL NOT CONSTITUTE A
WAIVER OF ANY RIGHTS WITH RESPECT THERETO, OR WITH RESPECT TO ANY SUBSEQUENT
ACTION BROUGHT BY A THIRD PARTY AGAINST EITHER PARTY HERETO. NOTHING CONTAINED
HEREIN SHALL CONSTITUTE A WAIVER OF ANY OTHER REMEDIES AVAILABLE TO EITHER PARTY
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR HEREIN.
Xxxx Xxxxxx
December 8, 1997
page 10
Neither party shall be entitled to recover damages or to terminate the
Term by reason of any breach by the other party of its material obligations,
unless the latter party has failed to remedy or commenced in good faith to
remedy the breach within a reasonable time following receipt of notice thereof.
Neither party shall be deemed in breach of any of its obligations unless and
until specific notice is sent by registered or certified mail, return receipt
requested, of the nature of such default and the party claimed to be in breach
shall have failed to either cure or commence to cure such breach within thirty
(30) days of its respective receipt of such written notice.
Push Records Inc.
By: /s/ Xxxxx Xxxxx
----------------------------------
Xxxxx Xxxxx, President, dated
AGREED AND ACCEPTED BY:
/s/ Xxxxx Xxxx 12/11/97
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Xxxxx Xxxx dated
/s/ Xxxxx X. Xxxxxx 12/10/97
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Xxxxx X. Xxxxxx dated
