AGREEMENT entered into as of August 1, 1999 between SUMTHING DISTRIBUTION, a
division of NRP, Inc. ("we" or "us"), 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 -
and - PRELUDE MUSIC AND FILM WORKS ("you").
The following will constitute our agreement:
1. You appoint us as your exclusive distributor throughout the United
States, its territories and possessions and Armed Forces Post Exchanges
("Territory") of your Records through Normal Retail Channels during the Term.
2. (a) The Term will commence on August 1, 1999 and will continue for 2
years.
(b) We will have the option to extend the Term for one (1) additional year,
by giving you written notice to that effect at any time prior to the date the
Term would otherwise have expired; provided, however, we may not exercise the
option unless "Net Sales" (as hereinafter defined) of Records prior to the date
the Term would otherwise expire is at least Two Hundred Fifty Thousand
($250,000.00) Dollars.
3. During the Term and in the Territory;
(a) We will solicit and process orders, and distribute your Records on your
behalf through Normal Retail Channels.
(b) The services to be rendered by us include billing and collecting from
customers and inventory control activities.
(c) We will process return of Records in accordance with our customary
policies and practices. (You acknowledge that we sell Records to our customers
on an "unlimited term" basis.)
(d) At your request, we will administer advertising for your Records up to
an amount mutually approved by you and us. You agree to reimburse us for all
costs incurred by us on your behalf in connection with advertising for your
Records, and for any costs incurred by us on your behalf in connection with the
marketing of Records through Normal Retail Channels.
(e) During the Term, we will accept and store, at your sole cost and
expense, all Records until such Records are sold. Promptly following our
request, you will remove from our facilities, or order the destruction of, any
"surplus" Records (i.e., that amount of Records in excess of our then-current
retention policy). All Records so removed may be defaced by us, and you will be
responsible for our customary charges therefor. With respect to Records so
removed, you will be responsible for any freight charges incurred by us to ship
any such "surplus" Records back to you.
4. (a) You will be responsible for the manufacture of your Records and
components and the delivery of all finished goods f.o.b. to our distribution
warehouse. All records will be delivered to us in all respects ready for sale
(including shrink-wrapping, stickering, inserts and similar costs). You will be
solely responsible for any shipping charges in connection with the manufacture,
sale or distribution of Records, or any other shipping charges hereunder.
(b) You and we will mutually determine the size of all manufacturing
orders.
(c) If for my reason you are unable to manufacture Records in accordance
herewith, we may, in our sole discretion, manufacture your Records on your
behalf. In such case, you will be solely responsible for paying all charges in
connection with the manufacture of your Records, including any shipping charges
and any services charges (e.g., shrink wrapping, stickering, insert charges,
etc.). We will deduct all such charges from Net Sales and any other monies, as
and when the same are due you hereunder.
5. (a) You will determine the retail list price category for each Record
from among the retail list price categories offered by us to our customers,
subject to our reasonable approval. With respect to a Record for which we do not
have a standard retail list price category (such as a "box set"), you and we
will mutually determine a retail list price.
(b) We will determine the selling price of Records to our customers, based
upon the retail list price category designated by you, and will be consistent
with our selling prices for other records in the same retail list price
category.
(c) You and we will mutually determine the release date of each title
hereunder.
6. (a) In respect of Records distributed hereunder, you will pay us (and we
may retain for our own benefit from proceeds hereunder) a distribution fee
("Distribution Fee") equal to twenty-three (23%) percent of Net Sales.
(b) You will pay us a "handling" charge equal to twenty cents (20>) for
each of your Records returned to us, provided, we will have the right, on notice
to you to increase the "handling" charge in an amount reasonably related to the
increase in our actual costs for handling returns
7. We will provide an accounting statement to you for Records distributed
by us hereunder no later than thirty (30) days after the end of the month in
which such Records were distributed. Payment for amounts due for Records sold
pursuant to each accounting statement will be made no later than thirty (30)
days after the end of the mouth in which we receive payment for Records sold. We
will pay you the amount due you after deduction of: (i) the Distribution Fee;
(ii) reserves as set forth in paragraph 8 below; (iii) all services charges,
including the returns handling changes; (iv) all manufacturing charges; and (v)
any and all other costs, fees or charges which we have the right to deduct or
which you otherwise owe us, including without limitation, co-op advertising and
retail marketing costs which we, at your request, may incur on your behalf.
(a) With respect to any month as to which there is a net amount due from
you to us, such net amount will be carried over and will be deducted from any
monies otherwise payable to you.
(b) (i) All statements rendered by us will be binding upon and not subject
to objection by you unless specific objection in writing, stating the basis
thereof, is given to us within one (1) year from the date rendered, and after
such notice of objection, unless suit is instituted within two (2) years after
the date rendered. Failure to make specific objection within said time period
will be deemed your approval of such statement.
(ii) You will have the right at your own expense to audit our books and
records with regard to statements rendered hereunder for one (1) year prior to
such audit, but only once with respect to any statement and only at our usual
place of business where such books and records are maintained. Such audit will
be conducted on your behalf by an independent certified public accountant during
our normal business hours and upon reasonable written notice.
8. In connection with each monthly statement we render, we will have the right
to withhold and deduct a reserve against returns and credits equal to
thirty-five (35%) percent of the Gross Sales of Records reflected in such
statement. Each reserve established by us will be summarized on a quarterly
basis, and will be liquidated as follows:
(a) Twenty-five (25%) percent of the reserve will be credited to your
account three months following the date that reserve was summarized and, after
deduction of the Distribution Fee.
(b) Twenty-five (25%) percent of the reserve will be credited to your
account six months following the date that reserve was summarized and, after
deduction of the Distribution Fee.
(c) Twenty-five (25%) percent of the reserve will be credited to your
account nine months following the date that reserve was summarized and, after
deduction of the Distribution Fee.
(d) Twenty-five (25%) percent of the reserve will be credited to your
account one year following the date that reserve was summarized and, after
deduction of the Distribution Fee.
9. (a) Within fifteen (15) days following the expiration or termination of
the Term, you will remove all inventory of your Records from our storage
facilities; provided, however, you will first deface such Records and packaging
to our reasonable satisfaction in order to insure that they will not be returned
to us. Notwithstanding the foregoing, you will not be required to deface Records
if you (i) notify all of our customers to send all returns of such Records to a
third party distributor who has agreed to accept all such returns; and (ii) take
all other steps which we deem reasonably necessary to insure that such returns
are sent to such third party distributor.
(b) At any time after the end of the Term we may, in our sole discretion,
cease accepting returns of Records hereunder.
10. (a) You warrant and represent that
(i) You have the right and power to enter into and fully perform this
agreement.
(ii) The compositions, Records, names, likenesses, performances, trademarks
and logos, and other musical, literary and intellectual properties embodied in
the Records (including packaging) hereunder will not violate any law or infringe
upon the rights of any third party, and you have the full right to exploit all
of the foregoing in the Records.
(iii) You own the exclusive right to exploit the Records and to distribute
the Records hereunder.
(iv) You are and will at all relevant times continue to be a signatory to
and will comply with the rules and regulations of any union or guild having
jurisdiction thereof, and all Records will have been recorded in accordance with
applicable union and/or guild agreement.
(v) Prior to our distribution of any Records hereunder, you will have
obtained all necessary consents, permissions and licenses in connection with the
Records, the Records and the packaging therefor (including without limitation,
mechanical licenses, artwork, licenses, so-called "sample" clearances and
musician clearances).
(vi) You will be solely responsible for any claim of non-payment of
recording costs in connection with the Records, and you will timely make all
other payments necessary in order to enable us to distribute the Records. You
will timely pay all mechanical and artist royalties and other sums due third
parties in connection with the Records.
(vii) You will be responsible for and will pay when due all sales and
property taxes (including any taxes on inventory) which may be applicable to the
transactions hereunder. Notwithstanding the foregoing, if we become liable for
any such taxes, we will have the right to charge you for the amount thereof from
proceeds hereunder.
(viii) We will not be responsible for the payment of any costs, expenses,
charges, fees or royalties to any persons whatsoever except as specifically
provided herein.
(b) You hereby indemnify and save us and our employees and agents harmless
from and against any and all claims, damages, liabilities, costs and expenses
(including reasonable attorneys' fees) arising out of any breach or alleged
breach of any warranties or representations made by you herein at your failure
to perform an accordance with this agreement. You will reimburse us on demand
for any payments made by us in respect of any claim or liability to which the
foregoing indemnity applies. We may withhold sums due you hereunder in any
amount reasonably related to our potential liability and cost pending the
resolution of any action as to which this indemnity applies.
11. For purposes of this agreement, the following terms will have the
following meanings:
(a) "Normal Retail Channels": Normal retail distribution channels in the
record industry, specifically including sales to record stores, book stores and
distributors, one-stops, rack jobbers and other wholesalers, mall order and
other direct-to-customer sales, so-called "electronic" transmissions, and any
other sales to our customers.
(b) "Records": Any device, now or hereafter known, on or by which sound or
sound coupled with visual images (whether or not also incorporating graphic
material and/or text in any interactive format) may be recorded and reproduced
which is manufactured, created or distributed primarily for home and/or consumer
use, including, without limitation: (i) audio cassettes, vinyl records, compact
discs, digital tapes and other audio formats; (ii) video-cassettes, video-discs,
DVD and other so-called "home video" devices; (iii) so-called "interactive"
devices such as CD-ROM; and (iv) devices created or recorded by the consumer or
other remote receiver from a digitally or electronically transmitted signal.
(c) "Net Sales": Gross Sales less the dollar amount of all returns,
credits, rebates, and adjustments and less reserves withheld in accordance with
the terms hereof.
(d) "Gross Sales": The dollar amount invoiced to and payable by our
customers for your Records distributed hereunder, determined after the deduction
of all applicable discounts.
12. (a) We will not be deemed in breach hereof if we are unable to perform
obligations due to a so-called "force majeure" event. If any such event occurs,
we will have the right to suspend the running of the Term until the passage of
such event.
(b) No failure to perform will be deemed a breach hereof unless the other
party gives the party in default written notice of such failure and same is not
cured within thirty (30) days thereafter.
(c) This agreement contains the entire understanding of the parties
relating to the subject matter hereof and cannot be changed or terminated except
by an instrument signed by the party to be charged.
(d) We may assign this agreement to any parent, subsidiary or affiliate, or
to any entity that merges its assets with ours or to any entity which hereafter
acquires all or substantially all of our stock or assets.
(e) This agreement has been entered into in the State of New York, and its
validity and legal effect will be governed by the laws of the State of New York
applicable to contracts entered
SUMTHING DISTRIBUTION
By: /s/
PRELUDE MUSIC & FILMWORKS
By: /s/ Xxx Xxxxx
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT made as of the 1st day of June, 2000 between SUMTHING
DISTRIBUTION, a division of NRP, Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("we or us") and PRELUDE MUSIC & FILMWORKS, 000 Xxxx Xxxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("you").
1. Reference is made to the agreement between us dated August 1, 1999
("Agreement").
2. It is understood and agreed that the entity Prelude Music & Filmworks
was a subsidiary or d/b/a of Prelude Development Inc.
3. The Agreement is hereby amended by changing the contracting party to Big
Dog Entertainment Inc. You warrant and represent that Prelude Music & Filmworks,
Prelude Development Inc., and Big Dog Entertainment Inc. have the same
management and ownership.
4. By signature below, you ratify and reaffirm the terms of the Agreement.
SUMTHING DISTRIBUTION,
A Division of NRP, Inc.
By: /s/ Xxxxxx Xxxxxxx
BIG DOG ENTERTAINMENT INC.,
formerly Prelude Music & Filmworks
By: /s/ X. X. Xxxxxx
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT made as of the 1st day of June, 2000 between SUMTHING
DISTRIBUTION, a division of NRP, Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("we or us") and PRELUDE MUSIC & FILMWORKS, 000 Xxxx Xxxxxx Xxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("you").
1. Reference is made to the agreement between us dated August 1, 1999
("Agreement").
2. It is understood and agreed that the entity Prelude Music & Filmworks
was a subsidiary or d/b/a of Prelude Development Inc.
3. The Agreement is hereby amended by changing the contracting party to Big
Dog Entertainment Inc. You warrant and represent that Prelude Music & Filmworks,
Prelude Development Inc., and Big Dog Entertainment Inc. have the same
management and ownership.
4. By signature below, you ratify and reaffirm the terms of the Agreement.
SUMTHING DISTRIBUTION,
A Division of NRP, Inc.
By: /s/
BIG DOG ENTERTAINMENT INC.,
formerly Prelude Music & Filmworks
By: /s/ X.X. Xxxxxx
