PHONOGRAPH RECORD LICENSE AGREEMENT
AGREEMENT made as of the 4th day of November, 1997 by and between PUSH
RECORDS, INC., 000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, U.S.A.
("Owner") -and- EAGLE ROCK ENTERTAINMENT, PLC. whose registered office is
located at Xxxxxxxx Xxxxx, Xxxxxx XX0X 0XX, Xxxxxxx and whose trading address is
00 Xxxxxxx Xxx, Xxxxxxxxxx, Xxxxxx XX00 0XX, Xxxxxxx ("Licensee").
W I T N E S S E T H:
In consideration of the mutual promises and covenants herein contained,
the parties hereby agree as follows:
x. Xxxxx and Scope of Rights.
(a) Owner hereby grants the following rights to Licensee during the
Term of this Agreement, subject to the other terms and conditions contained
herein:
(i) The exclusive right to press, duplicate and sell in the
"Territory" (as defined below), phonograph albums and "Approved Singles" (as
defined below) only, manufactured from certain master recordings owned and
controlled by Owner (sometimes called the "Licensed Masters") embodying the
performances of the recording and performing artists p/k/a Xxxxx Xxxx and Xxxx
Xxxxx (collectively, the "Artist"). The Licensed Masters shall consist of: (A)
those masters embodied on the album entitled "Marigold Sky" ("Album 1"), and (B)
subject to the timely exercise of Licensee's option provided in subparagraph
1(b) below, the studio album first recorded by the Artist following the
recording of Album 1 ("Album 2") (the aforesaid albums are sometimes
individually referred to herein as an "Album" and such albums are sometimes
collectively referred to herein as the "Albums"). As used herein, the term (x)
"Territory" shall mean the following countries: Albania, Andorra, Armenia,
Austria, Xxxxxxx, Xxxxxxx, Xxxxxx, Xxxxxxxxxxx, Xxxxxxxx, Channel Islands,
Crete, Croatia, Cyprus, Czech Republic, Denmark, Eire, Estonia, Finland, France,
Georgia, Germany, Greece, the Greek Islands, Greenland, Hungary, Iceland, Isle
of Man, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta,
Monaco, Netherlands, Norway, Poland, Portugal, Romania, Russia, San Marino,
Serbia Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey,
Ukraine, United Kingdom, Vatican City and Yugoslavia, and (y) "Approved Singles"
shall mean singles embodying Licensed Masters that were released by Owner in the
U.S. as singles. Owner shall, promptly following Licensee's request from time to
time, advise Licensee as to the particular Licensed Masters that have been
previously released in the U.S. by Owner as singles; the Licensed Masters
entitled "Promise Ain't Enough", "Romeo is Bleeding" and "Sky Is Falling" have
been released in the U.S. by Owner as singles. The Licensed Masters embodied on
Album 1 are listed on Schedule A attached hereto.
(ii) The exclusive right, subject to subparagraph 3(a)(iv)
below, to use or license the use of any of the Licensed Masters or the
performances embodied thereon, subject to Owner's prior written consent (which
consent may be withheld by Owner in Owner's sole
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discretion), for use in connection with (x) the synchronization of said
performances with television productions and/or motion pictures that are
exploited solely in the Territory (except with respect to the synchronization of
Licensed Masters in audiovisual commercials in respect of the promotion and
marketing of the Licensed Masters), or (y) any "sight and sound" or
"audio-visual" device, including, without limitation, video discs and video
cassettes, that are exploited solely in the Territory.
(iii) The right to use and publish the name and approved
photographs (or photographs supplied by Owner) of the Artist solely in
connection with the advertising and sale by Licensee of "Records" (as defined
below) sold hereunder embodying the performances of the Artist.
(iv) The right, to the extent permitted by the applicable laws
of the Territory, to authorize the public performance of the Records embodying
the Licensed Masters in all media in the Territory, including but not limited
to, performances on radio and television.
(b) (i) Licensee acknowledges that, notwithstanding anything to the
contrary contained herein, Artist is not required to record and deliver Album 2
to Owner and Owner is not obligated to cause Artist to record and deliver Album
2 to Owner. However, Licensee shall have the option (the "Option"), subject to
the preceding sentence [and provided (x) Licensee has received the "Confirmation
Notice" (as defined below), and (y) the "Sales Minimum" (as defined below) has
occurred], to cause Album 2 to become subject to this Agreement. The Option may
be exercised, if at all, by Licensee by notice in writing to Owner not later
than thirty (30) days following the later of Licensee's receipt of the
Confirmation Notice and the occurrence of the Sales Minimum.
(ii) As used herein, the term (x) "Confirmation Notice" shall
mean Owner's notice to Licensee indicating that (A) Artist has confirmed (in
accordance with Artist's recording agreement with Owner) to Owner that Artist
will be delivering Album 2 to Owner, or (B) Artist previously delivered Album 2
to Owner [Owner shall provide the Confirmation Notice to Licensee, if at all, no
earlier than the date that Sales Minimum occurs but promptly following the
occurrence of either of the events indicated in subsections (A) or (B) of this
subparagraph], and (y) "Sales Minimum" shall be deemed to have occurred if the
aggregate royalties (other than mechanical royalties) credited to Owner's
account from the exploitation of Album 1 in the Territory during the twelve (12)
month period following the initial release of Album 1 equals or exceeds One
Hundred Fifty Thousand ($150,000) U.S. Dollars.
2. Limitations On Rights.
(a) Licensee shall not manufacture, distribute, or sell Records on
so-called mid-priced or low-priced lines (i.e., Records sold at less than the
highest published price to dealers category), provided, however, Licensee shall
have the right to release a particular
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Licensed Master on an Record sold as a (i) "mid-priced Record" (as defined
below) not earlier than one (1) year following the initial release of such
Licensed Master in the Territory, and (ii) "budget Record" (as defined below)
not earlier than eighteen (18) months following the initial release of such
Licensed Master in the Territory. A mid-priced Record is a Record sold which has
a published price to dealers at least seventeen and one-half (17.5%) percent
lower, but not more than thirty-two (32%) percent lower, than the published
price to dealers applicable to top-line Records in the same format. A "budget
Record" is a Record sold which has a published price to dealers at least
thirty-two (32%) percent lower than the published price to dealers applicable to
top-line Records in the same format.
(b) Licensee shall not edit, re-mix, alter or otherwise change the
Licensed Masters and Licensee shall release each particular Album (and Approved
Single(s)) using the same packaging artwork and liner notes and in the same
formats, sequence and embodying all the Licensed Masters as used by Owner (or
its distributor) for the initial release of the particular Album (and Approved
Single(s)) concerned through normal retail channels in the United States (unless
otherwise agreed in writing by Owner), provided, however, Album 1 shall include
an additional Licensed Master that is a club remix of the musical composition
entitled "Hold On To Yourself" that is not embodied on the album entitled
"Marigold Sky" as initially released by Owner in the U.S. The release of Records
embodying Licensed Masters in the Territory other than the Albums (and Approved
Single(s)) shall be made only with Owner's prior written consent.
(c) Licensee shall not couple or recouple the Licensed Masters with
any other Licensed Masters (other than as delivered to Licensee). Licensee shall
not couple or recouple the Licensed Masters with any other master recordings
without Owner's prior written consent, which consent may be withheld by Owner in
Owner's sole discretion.
(d) Licensee will not distribute or authorize the distribution of
Records hereunder as "premiums", i.e., Records sold or otherwise distributed in
association with a product or service other than phonograph records, which right
is specifically reserved to Owner.
(e) Licensee shall not sublicense to any third party [other than to
Licensee's primary licensees in the Territory, which Owner acknowledges are, as
of the date hereof, (i) BMG Music in the U.K., (ii) Play It Again Xxx Records
for Belgium, Netherlands and Luxembourg, and (iii) Edel Records for the
remaining countries of the Territory] any rights granted by Owner hereunder.
Licensee's primary licensees are sometimes individually referred to herein as a
"Sublicensee" and collectively as the "Sublicensees". Licensee shall cause each
Sublicensee to be bound by all of the restrictions that Licensee is required to
be bound by hereunder.
(f) It is expressly understood and agreed that Records shall be
manufactured by Licensee only in quantities consistent with the anticipated
local demand therefor in the
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Territory during the Term of this Agreement and in accordance with Licensee's
normal and ordinary business policies so as not to result in an excess inventory
build-up immediately prior to the expiration of the Term of this Agreement.
3. Reservation of Rights.
(a) The following shall be and remain the property of Owner:
(i) Each Licensed Master supplied by Owner under this
Agreement, as well as all mothers and stampers produced therefrom by or for
Licensee (and the Sublicensees);
(ii) Owner's copyrights and other property rights under
statutory and/or common law in the Licensed Masters, tapes, cover artwork,
photographs, separations, matrices, and mothers and stampers, as well as all
other rights not specifically granted herein to Licensee by Owner;
(iii) Any and all copyrights, trademarks or other similar
rights or other property rights which may accrue to Licensee or to any of its
distributors (including the Sublicensees), agents or representatives by reason
of the exercise of the rights granted by this Agreement; and
(iv) The exclusive right to use or license any of the Licensed
Masters or the performances embodied thereon for use in connection with the
synchronization of said performances with television productions and/or motion
pictures, including any soundtrack albums derived therefrom (or in connection
with any "sight and sound" or "audio-visual" device, including without
limitation, video discs and video cassettes distributed for home use), which may
be exploited (A) throughout all or a portion of the world (including the
Territory), provided that such productions are produced outside of the
Territory, and (B) outside the Territory, provided that such productions are
produced in the Territory.
(b) Neither Licensee nor anyone claiming rights through Licensee
(including the Sublicensees) shall sell, assign, transfer, mortgage, hypothecate
or subject to any lien or encumbrance, any of the above rights, and any attempt
thereto shall be null and void and of no force and effect whatsoever.
(c) Licensee will, upon request, execute or cause to be executed by
Licensee and/or the Sublicensees, and will deliver to Owner, all documents
necessary to establish and effectuate Owner's unencumbered ownership of all such
rights.
4. Term.
The term of this Agreement (the "Term") shall commence as of the
date hereof and shall terminate six (6) years following the date of initial
release in the Territory of the last Album delivered hereunder (unless the Term
hereof has been terminated earlier in accordance
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with any applicable provisions hereof); however, notwithstanding the foregoing,
in no event shall the Term of this Agreement continue with respect to Album 1
for a period longer than six (6) years from the date hereof (the "License
Term"); following the end of the License Term, all rights granted hereunder to
Licensee with respect to Album 1 shall end, subject to subparagraph 15(e) below,
and all such rights shall revert to Owner. For purposes of clarification, it is
agreed that upon the termination of the Term of this Agreement for any reason,
the License Term shall likewise terminate.
5. Payments and License Fees.
In consideration of the license and rights granted by Owner
hereunder, Licensee agrees to pay all of the following to Owner:
(a) Owner's cost (in accordance with Owner's price list, as same may
be changed from time to time) plus packaging and shipping expenses, for the
duplication of Licensed Masters, and for all negatives, advertising,
promotional, display and any other supplies and materials supplied, or caused to
be supplied, by Owner at Licensee's request (or otherwise approved by Licensee),
which items shall be shipped to Licensee C.O.D.
(b) (i) (A) A royalty in the amount described in Section (B) below.
Those royalties will be payable on all "net" distributions of such Records (i.e.
100% of all Records sold by Licensee less only any Records actually returned and
reserves against anticipated returns and credits (subject to subparagraph 10(c)
below)) and without deductions for container charges or any other offsets.
(B) (I) The royalty hereunder will be (x) One Pound
Sterling and Fifty Xxxxx (Li.1.50) per Album with respect to Albums in cassette
and vinyl configurations (the "Cassette/Vinyl Xxxxx Rate") sold at the
applicable published price to dealers indicated on Exhibit B attached hereto (a
"Cassette/Vinyl Base PPD"); the Cassette/Vinyl Xxxxx Rate will be
proportionately increased with any increases in the actual applicable published
price to dealers that exceed the applicable Cassette/Vinyl Base PPD (the
Cassette/Vinyl Xxxxx Rate, whether or not increased, is sometimes referred to
herein as the "Cassette/Vinyl Basic Rate"), and (y) Two Pounds Sterling
(Li.2.00) per Album with respect to Albums in compact disc, DAT or any other
configurations (the "CD Xxxxx Rate") sold at the applicable published price to
dealers indicated on Exhibit B attached hereto (a "CD Base PPD"); the CD Xxxxx
Rate will be proportionately increased with any increases in the actual
applicable published price to dealers that exceed the applicable CD Base PPD
(the CD Xxxxx Rate, whether or not increased, is sometimes referred to herein as
the "CD Basic Rate"). The Cassette/Vinyl Basic Rate and the CD Basic Rate are
sometimes referred to herein as the "Basic Rate(s)".
(II) The royalty payable to Owner hereunder with
respect to Albums sold as a midprice Record shall be One Pound Sterling
((pound)1). The royalty payable to Owner hereunder with respect to Albums sold
as a budget Record shall be sixty-five xxxxx (.65); and
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(III) In respect of Licensed Masters licensed or
made available by Licensee to third parties for the manufacture, distribution or
sale of Records utilizing key-outlet distributors or any similar method of
operation, or through any record club, mail order or similar operation, Licensee
shall credit Owner's royalty account with one-half (1/2) of the net royalties
and advances actually received by Licensee from such third parties after
deducting therefrom all taxes included within such receipts, only. However,
Owner's royalty account shall be credited with a royalty on at least fifty (50%)
percent of all records distributed through any record club.
(IV) The royalty rate on any Licensed Master(s)
embodied on a phonograph record ("Compilation Record") containing other master
recording shall, subject to the second sentence of subparagraph 2(c) above, be
(i) the otherwise applicable royalty rate provided herein if such Compilation
Record is released by Licensee, and (ii) equal to fifty-five (55%) percent of
all monies received by Licensee in respect of each such use if such Compilation
Record is released by a company other than Licensee. The royalty rate on a
record embodying a Licensed Master together with other master recordings will be
computed by multiplying the royalty rate otherwise applicable by a fraction, the
numerator of which is the number of Licensed Masters contained on the particular
record concerned and the denominator of which is the total number of
royalty-bearing master recordings contained on such record.
(V) The royalty rate on any Record sold in
conjunction with a substantial television campaign conducted with Owner's prior
written consent (which consent shall not be unreasonably withheld) shall be
one-half (1/2) of the otherwise applicable rate during the calendar semi-annual
period in which the campaign begins, but only in the country(ies) concerned, and
in no event later than the date when Licensee has recouped fifty (50%) percent
of the cost of that television advertising campaign from such royalty reduction.
(C) A royalty rate, with respect to singles embodying
the Licensed Masters, equal to twenty (20%) percent (the "basic Single rate") of
the published price to dealers.
(ii) Licensee shall not sell or distribute "bonus", "free" or
"promotional" records except that in the case of Records pressed by Licensee in
the Territory pursuant hereto, Licensee may distribute bona fide samples in
reasonable quantities to the trade in accordance with customs generally
prevailing in the Territory. Licensee shall not offer any of Owner's Records as
an incentive for the sale of records other than Owner's Records hereunder.
(c) A sum of money equal to fifty (50%) percent of all fees, if any,
received by Licensee for the public performance (including, but not limited to,
broadcast over radio and television) of phonograph records manufactured and sold
hereunder. Whenever such fees are not computed and paid in direct relation to
the public performance of such records, such fees
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shall be computed, for the purpose of this Agreement, by multiplying the total
amount received by Licensee by a fraction, the numerator of which is the number
of Records manufactured and sold hereunder during the applicable accounting
period and the denominator of which is the total number of records sold in the
Territory by or on behalf of Licensee during the applicable accounting period.
(d) With respect to royalties payable to copyright proprietors by
reason of Licensee's exercise of its rights hereunder, Licensee agrees to secure
licenses from such copyright proprietors or their agents in the Territory and to
make payments directly to such proprietors or agents. Licensee and the
Sublicensees shall indemnify and hold Owner harmless of and from any claims or
liabilities resulting from Licensee's (or the Sublicensees) failure to make such
payments. Owner warrants and represents that Licensee and the Sublicensees shall
be able to obtain mechanical licenses to reproduce musical compositions embodied
on Records distributed in the Territory on terms no less favorable to Licensee
and the Sublicensees than those generally applicable to record manufacturers in
each country of the Territory.
(e) Intentionally Deleted.
(f) (i) Licensee shall pay to Owner the non-returnable sum of One
Hundred Thousand ($100,000) U.S. Dollars, the receipt of which is hereby
acknowledged, which shall be an advance recoupable against the royalties payable
to Owner under paragraph 5(b) and (c) above.
(ii) In the event that Licensee exercises the Option, Licensee
shall pay to Owner the non-returnable sum of Two Hundred Thousand ($200,000)
U.S. Dollars which shall be an advance recoupable against the royalties payable
to Owner pursuant to subparagraphs 5(b) and (c) above; such advance shall be
paid to Owner as follows: one (1/2) of such amount shall be paid to Owner
promptly following the exercise of the Option and the balance of such amount
shall be paid promptly following the delivery of Album 2 to Licensee hereunder.
5A. Tour Support.
Licensee agrees to pay to Owner a non-returnable amount as tour
support equal to Ninety One Thousand ($91,000) U.S. Dollars (the "Tour Support
Monies"). The Tour Support Monies shall be payable promptly following the
execution hereof. No more than Sixty One Thousand ($61,000) U.S. Dollars of the
Tour Support Monies shall be recoupable from any and all royalties payable to
Owner pursuant to this Agreement (other than mechanical royalties), and the
balance of the Tour Support Monies shall be non-recoupable hereunder.
6. Dealer Price.
At all times during the Term of this Agreement, and during the
sell-off period, Licensee hereby agrees that all phonograph records sold under
the terms of this Agreement shall be marketed at the full and normal dealer
price that is usual for said phonograph records
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in the configurations involved, except as otherwise specifically provided
herein.
7. Release Obligations.
(a) (i) Licensee agrees to release each particular Album in the
United Kingdom, France, Germany, Norway, Sweden and Denmark (the "Major Market
Countries") within the period of sixty (60) days following the date of delivery
of the Album concerned to Licensee (except fifteen (15) days following the date
hereof with respect to Album 1) (a "Required Release Date"), but not earlier
than the release of the particular Album in the United States, unless notified
to the contrary by Owner in writing. If Licensee fails to release a particular
Album in each of the Major Market Countries within the period provided above,
Owner shall notify Licensee of such failure and Licensee shall have the right to
release such Album in the particular Major Market Countries concerned within
thirty (30) days following the date of Owner's notice to Licensee (the "Major
Market Countries Cure Period"). If Licensee fails to release the particular
Album concerned in the Major Market Countries concerned within the Major Market
Countries Cure Period, then, notwithstanding anything to the contrary contained
in paragraph 15 and without limitation of Owner's rights or remedies, the Term
of this Agreement shall automatically terminate.
(ii) Owner hereby agrees that Owner will not release or
authorize the release of any Album hereunder outside of the Territory prior to
the applicable Required Release Date.
(b) Licensee shall release each particular Album in each country of
the Territory (other than the Major Market Countries)(the "Subject Countries")
within ninety (90) days following the date of delivery to Licensee of the Album
concerned. If Licensee fails to release each particular Album in each of the
Subject Countries within such ninety (90) day period, Owner shall notify
Licensee of such failure and Licensee shall have the right to release the Album
concerned in each of the Subject Countries concerned within thirty (30) days
following the date of Owner's notice to Licensee (the "Subject Countries Cure
Period"). If Licensee fails to release the particular Album concerned in each of
the Subject Counties concerned during the Subject Countries Cure Period, then,
notwithstanding anything to the contrary contained in paragraph 15, the Term of
the Agreement shall terminate with respect to the Subject Countries concerned
(and all of Licensee's rights hereunder in such Subject Countries shall be
deemed terminated immediately). As used herein, the term "release" shall mean to
manufacture, and make reasonable efforts to market, enough records to supply all
key retail outlets in the Territory hereunder with sufficient recordings to
expose the subject recordings to the public.
8. Trademark.
(a) Licensee agrees that all Records distributed hereunder shall be
distributed under the "Push Records" label. Licensee agrees that the labels, the
spines, the liner notes and the sleeves or covers of all Records released
hereunder (including promotional copies of the Records and promotional copies of
any Videos) shall bear Owner's trademark, service xxxx and logo identification
(the "Xxxx") (and Owner agrees to supply such Xxxx with the artwork hereunder),
and material used in advertising such Records shall also bear the
8
Xxxx. Licensee acknowledges that the foregoing requirement is of the essence of
this Agreement. Owner hereby grants Licensee the right to use the Xxxx on
Records made from the Licensed Masters supplied by Owner hereunder in the
Territory and nowhere else and for no other purpose. Owner warrants and
represents that the Xxxx will not infringe the rights of any third party and
that Licensee and the Sublicensees shall have the right to utilize the Xxxx in
accordance with the terms and conditions contained herein.
(b) Licensee acknowledges the Owner's exclusive right, title and
interest in and to the Xxxx and will not at any time do or cause to be done any
act or thing contesting or in any way impairing or tending to impair any part of
such right, title and interest. In connection with the use of the Xxxx, Licensee
shall not in any manner represent that it has any ownership in the Xxxx or
registration thereof and Licensee acknowledges that use of the Xxxx shall not
create in Licensee's favor any right, title or interest in or to the Xxxx, but
all uses of the Xxxx shall inure to the benefit of Owner. Upon termination of
Licensee's rights hereunder in any manner provided herein, Licensee will cease
and desist from all use of the Xxxx in any way and, furthermore, Licensee will
at no time adopt or use without Owner's prior written consent, any word, symbol
or design which is likely to be similar or confusing with the Xxxx.
(c) Licensee shall deliver to Owner ten (10) copies of each Record
released hereunder, in each configuration released. Owner shall have the right
to evaluate the quality of Licensee's releases and if they are below Owner's
standards, Owner shall notify Licensee in writing. Upon receipt of such a notice
of quality deficiency, Licensee shall take immediate steps to improve the
quality of the Records concerned so that they will meet Owner's standards.
9. Accounting Statements.
(a) In respect of all periods in which phonograph records are
distributed hereunder, Licensee agrees to keep all usual and proper records and
books of account and make all usual and proper entries therein relating to the
manufacture and sale of phonograph records hereunder and other permitted
exploitations of the Licensed Masters hereunder and to deliver to Owner within
sixty (60) days following the expiration of each calendar quarter, detailed
written statements which shall be certified by an officer of Licensee, showing
sales of phonograph records hereunder during such period. Such statements shall
include the following information: (i) the number of Records sold in each
country of the Territory during the accounting period (and details regarding
other exploitations of the Licensed Masters); (ii) the date of first release and
the retail list price of each Record sold in each country of the Territory
during the accounting period; (iii) the amount of royalties and other payments
due to Owner pursuant to this Agreement; and
(b) Simultaneously with the delivery of the accounting statements
referred to in the preceding subdivision of this paragraph, Licensee shall pay
to Owner all sums due to Owner, if any. All payments shall be made in United
States Dollars to Owner at the address above first noted, computed at the rate
of exchange existing on the date the payments are required to be made pursuant
to the terms of this Agreement. The exchange rate applicable to
9
any such late payments shall be that rate which prevails on the date payment was
due hereunder. In the event that Licensee is unable because of governmental
restrictions to make payment in the manner described in the preceding sentence
and if Owner agrees to accept payment in Licensee's national currency, Licensee
shall deposit (at Owner's expense) to Owner's credit or account or to such other
account as Owner may from time to time designate, in a depository selected by
Owner, all sums payable to Owner hereunder.
10. Income Tax Provisions.
(a) In the event Licensee shall be obliged by the laws of any
country the Territory to deduct and withhold income or other similar tax from
royalties payable to Owner hereunder, then without limiting the generality of
paragraph 9, Licensee shall include in each applicable accounting statement or
credit memorandum, the amount of tax which shall have been withheld and the rate
of tax (such taxes shall be deducted only once with respect to any royalty
payments, and only in the country in which the applicable Licensed Master(s) was
exploited). Upon Owner's request, Licensee shall supply Owner with a certificate
setting forth the aforesaid information and any other necessary information
which may assist Owner, upon presentation of such certificate, to obtain income
tax credit from the applicable tax authorities for the tax so withheld.
(b) Notwithstanding anything to the contrary contained herein, nor
in the laws of any country of the Territory, there shall be no taxes or other
sums withheld from the payments payable to Owner pursuant to this Agreement
provided that Owner executes and delivers an Internal Revenue Service Form 1001
(or such other documents required by the Internal Revenue Service) to you.
11. Audits.
Licensee shall permit Owner or its duly authorized representative to
inspect, audit, abstract and copy such of Licensee's books and records as they
reasonably relate to the subject matter of this Agreement at reasonable times
and intervals at Licensee's regular place of business but in no event more than
once per year. Such inspection shall be at Owner's expense; provided, however,
that if an error of more than the greater of (x) ten (10%) percent and (y) Five
Thousand Pounds Sterling (Li.5,000) is found either in such records or in such
accounting statements, then Licensee shall reimburse Owner for the expense of
such inspection (excluding travel and hotel accommodation expenses incurred in
connection with such inspections) in addition to remitting the amount shown
properly to be due. These provisions shall continue in full force and effect for
a period of three (3) years after the termination of the Term of this Agreement.
All royalty statements and all other accounts rendered by Licensee to Owner
shall be binding upon Owner and not subject to any objection by Owner for any
reason unless specific objection in writing, stating the basis thereof, is given
to Licensee within three (3) years from the date rendered. Owner shall be
foreclosed from maintaining any action, claim or proceeding against Licensee in
any forum or tribunal with respect to any statement or accounting rendered
hereunder unless such action, claim or proceeding is commenced against Licensee
in a court of competent jurisdiction within four (4) years after the date such
statement is rendered.
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12. Licensee's Warranties.
Licensee warrants and represents that:
(a) Licensee is now and will continue to be engaged during the Term
of this Agreement in the manufacture, sale, distribution and exploitation of
phonograph records in the Territory.
(b) Licensee will use all reasonable efforts to promote the
manufacture, sale, distribution and exploitation in the Territory of phonograph
records containing the Licensed Masters.
(c) Licensee possesses the full right, power and authority to enter
into and to perform this Agreement.
(d) With respect to royalties payable to copyright proprietors by
reason of Licensee's (and the Sublicensees) exercise of its rights hereunder,
Licensee agrees, subject to the terms and conditions herein, to secure licenses
from such copyright proprietors or their agents in the Territory and to make
nonrecoupable payments directly to such proprietors or agents.
13. Owner's Warranties.
(a) Owner warrants and represents:
(i) At the time of delivery of each Licensed Master and during
the Term hereof, Owner (or Owner's assignee) will be the exclusive owner, or
otherwise control, the rights herein granted to Licensee in the respective
Licensed Masters.
(ii) Owner possesses the full right, power and authority to
enter into and to perform under this Agreement. Owner will not grant to any
person, company or firm any right for the Territory which Licensee is entitled
to exercise hereunder in respect of the Licensed Masters.
(iii) Owner shall pay all royalties and other payments which
may become due to Artist, producers and musicians whose performances are
embodied in the Licensed Masters, but excluding royalties payable for the use of
musical compositions which shall be Licensee's sole responsibility.
(iv) To the best of Owner's knowledge, the Licensed Masters
hereunder will not violate or infringe upon any common law or statutory right of
any person, including, without limitation, any contractual rights, copyrights,
rights of privacy, rights of publicity, trademark rights and rights to trade
names.
(v) During the Term, Owner shall not permit Artist to perform
for any
11
person, firm or corporation (other than Licensee) for the purpose of making
records embodying the compositions embodied in the Licensed Masters for
exploitation in the Territory.
(b) Owner agree to indemnify and hold Licensee harmless against any
claim, liability, cost and expense (including reasonable attorneys' fees and
legal costs) in connection with any claim brought by a third party which is
inconsistent with any agreement, covenant, representation, or warranty made by
Owner herein which has resulted in a final adverse judgment or has been settled
with Owner's consent, which consent shall not be unreasonably withheld. Owner
will reimburse Licensee promptly following demand for any payment made by
Licensee at any time after the date hereof in respect of any claim, liability,
damage or expense to which the foregoing indemnity relates. Licensee shall
promptly notify Owner upon the making or filing of any such claim, action or
demand, and, Licensee shall be entitled to withhold from any amounts payable
under this Agreement such amounts as are reasonably related to the potential
liability in issue; however, if litigation based on any such claim is not
commenced within twelve (12) months following the presentment of such claim,
Licensee shall release all such monies being withheld as a result of such claim.
Licensee shall not withhold sums in connection with a claim if Owner posts a
bond in a form and with a bonding company reasonably approved by Licensee and in
an amount equal to the reasonable potential liability. Owner shall be notified
of any such claim, action or demand and Owner shall have the right, at Owner's
own expense, to participate in the defense thereof with counsel of Owner's own
choosing; provided, however, Licensee's decision in connection with the defense
of any such claim, action or demand brought against Licensee shall be final.
14. Assignability.
Neither this Agreement nor the rights granted to Licensee hereunder
may be assigned by Licensee and any such attempted assignment shall be void.
Owner shall be entitled to assign this Agreement, including its rights
hereunder, to any parent, affiliated or subsidiary company or corporation, or to
anyone owning or acquiring substantially all of the capital stock or assets of
Owner, or to any third party, provided such assignee agrees to be bound by the
terms and conditions hereof.
15. Termination.
(a) Bankruptcy and Insolvency. In the event Licensee shall be
adjudged a bankrupt or in the event that any insolvency proceedings are
instituted by or against Licensee and are not dismissed within thirty (30) days
after the institution thereof or in the event of any reorganization proceedings,
either voluntary or involuntary in bankruptcy, or in the event a trustee or
receiver is appointed to take over all or a substantial part of Licensee's
assets, Licensee's rights under this Agreement shall automatically terminate,
and such termination shall be deemed effective as of the commencement of the
event which gave rise to such termination. In the event of such termination,
then all monies due and unpaid by Licensee pursuant to this Agreement shall
thereupon become due and payable, and no part of any unrecouped advance shall be
refundable to Licensee in any event. Further, all master recordings, videos, and
all copies thereof, all color separations and other artwork and all other
12
property of Owner shall be returned to Owner at Licensee's expense, and in no
event shall the title thereto or any rights therein be acquired by or vest in
any trustee, receiver or in any other party by reason of any such insolvency,
bankruptcy or other such occurrence affecting Licensee.
(b) Governmental Acquisition. In the event Licensee's business is
taken over by any governmental authority, Owner shall have the right to
terminate this Agreement forthwith without affecting its own rights under this
Agreement.
(c) Breaches.
(i) In the event that Licensee shall fail or refuse to deliver
any of the statements or payments provided hereunder, or fail or refuse to
perform any other obligation on Licensee's part required to be performed
hereunder or is in breach of this Agreement (and Licensee's breach continues for
a period of thirty (30) days following Owner's notice thereof [twenty (20) days
in respect of a failure to deliver statements or payments], except any breach by
Licensee of this Agreement by distributing, or authorizing or permitting the
distribution of, Records embodying Licensed Masters outside the Territory shall
not be subject to any such cure period), then, without limitation of Owner's
rights, Owner shall have the absolute right to terminate the Term of this
Agreement and all of Licensee's rights hereunder with immediate effect at any
time. Notwithstanding the foregoing, in the event that Owner notifies Licensee
that such Records are being exported to one or more countries outside of the
Territory, Licensee shall consult with Owner in connection therewith, and
Licensee shall take all steps reasonably necessary to protect Owner against such
exports. For purposes of clarification and notwithstanding anything to the
contrary contained herein, in the event that Licensee or the Sublicensees sell
any Records hereunder in the Territory to an entity which in turn sells such
Records outside of the Territory, such sales shall not constitute a breach
hereof unless Licensee or its licensees had knowledge (or should have had
knowledge) of such exportation (or intent to export).
(ii) Owner shall not be deemed to be in breach of any of its
material obligations hereunder, unless Licensee notifies Owner thereof, and
Owner fails to cure such breach, if any, within thirty (30) days following its
receipt of such notice.
(d) Termination Procedure. Upon the expiration of the Term, Licensee
will continue to be responsible for accountings and payments as set forth in
this Agreement. Upon the expiration of the License Term with respect to each
Album, Licensee will return to Owner or to Owner's designee at Licensee's
expense, any master recordings, Videos, artwork, color separations, mothers,
stampers or any other material furnished to Licensee hereunder.
(e) Post-Term Procedure.
(i) Within twenty (20) business days after the expiration of
the Term
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in connection with each such Album(s), Licensee shall notify Owner of the amount
of inventory of finished recordings existing at the expiration of such License
Term as to each such Album. At any time after Owner receives such notice but
prior to the expiration of the sell-off period, Owner may notify Licensee that
it wishes to purchase Licensee's inventory at Licensee's actual cost of
manufacture to be paid for in cash within thirty (30) days of delivery of such
inventory (or part or parts thereof as the case may be) in marketable conditions
to Owner or its designee or, by way of a total or partial offset against any
indebtedness or other claim in Owner's favor against Licensee.
(ii) If Owner does not elect to purchase Licensee's inventory
of the Albums, then, except as hereinabove provided, Licensee shall have a
period of six (6) months, commencing upon the date of expiration of the Term, in
which to sell in the normal course of business, Licensee's then existing
inventory (such period is sometimes referred to herein as the "sell-off period")
of the Records hereunder, during which period it is expressly understood that
other licensees may be authorized to sell Records derived from the Licensed
Masters in competition with Licensee.
(iii) The sale price charged by Licensee for the Records sold
by Licensee during the sell-off period shall, except as otherwise expressly
permitted herein, be the highest published price to dealers prevailing during
the Term of this Agreement on a record by record basis, and no special allowance
or discounts shall be given in order to effect a price reduction.
(iv) Licensee shall continue to render payments and
accountings with respect to Records sold by Licensee during the sell-off period
in the same manner as during the Term relating to such Album.
(v) At the conclusion of the sell-off period, Licensee shall
make no further sale of Records hereunder and shall forthwith destroy its then
remaining inventory of such Records and furnish Owner with an affidavit sworn to
before a person authorized to take oaths that such destruction has been effected
(if requested).
(vi) This paragraph 15(e) shall not be applicable in the event
the Term of this Agreement is terminated pursuant to paragraph 15(c) above.
16. Notices.
Any notice, accounting or payment which either party hereto is
required or desires to give to the other party shall be in writing addressed to
the respective addresses first above written (at Licensee's trading address in
the case of notices to Licensee), or to such other address as either party shall
designate in writing to the other party from time to time and shall be delivered
personally or sent by an established overnight courier which provides written
proof of delivery, such as Fedex or DHL. Unless otherwise set forth in this
Agreement, all notices and accountings shall be deemed duly given when actually
received. A copy of all notices sent to Owner by Licensee shall be sent to
Grubman Indursky & Xxxxxxxxx,
14
P.C., 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxx X. Xxxxxxxxx, Esq. A copy of all notices sent to Licensee by Owner shall be
sent to Sheridans, 00 Xxx Xxxx Xxxxxx, Xxxxxx XX0X XXX, Xxxxxxx, Attn: Xxxxxx
Xxxxxxx, Esq., provided, however, the failure to send such copies shall not be
deemed a breach hereof or affect the validity of the notice sent.
17. Video.
Owner shall, from time to time during the Term at Licensee's
request, deliver certain short-form promotional audiovisual recordings videos
embodying Licensed Masters derived from each Album ("Video[s]"), but only to the
extent that any such Videos have actually been produced and only to the extent
Owner controls such rights in any such Videos; Owner shall have no obligation to
produce any such Videos. Licensee shall have the right to use such Videos during
the Term for promotional purposes only. In the event that Licensee desires to
exploit such Video(s) as provided herein, Licensee agrees to pay Owner, an
amount to be negotiated in good faith between the parties hereto. All
restrictions and post-Term provisions applicable to Licensee's use of Licensed
Masters shall likewise apply to any Videos delivered hereunder. Without
limitation of the foregoing, Licensee shall not have the right to distribute or
exploit any Video in connection with any audio-visual devices, including,
without limitation, any video discs or video cassettes.
18. Miscellaneous.
(a) This Agreement constitutes the entire understanding between the
parties, and no modifications hereof shall be binding unless in a writing signed
by the party to be charged. This Agreement is made in and shall be construed in
accordance with the laws of the State of New York applicable to contracts
executed in and wholly to be performed therein. This Agreement shall not be
effective until signed by all parties thereto.
(b) All rights, remedies, undertakings and obligations contained in
this Agreement shall be cumulative and none of them shall be in limitation of
any other right, remedy, obligations or undertaking of either party. A waiver by
either party of any provision of this Agreement shall not be deemed to be a
waiver of any past or future breach of the same, or any other provision of this
Agreement, nor shall any act or failure to act be construed as a waiver, unless
a memorandum thereof, expressing the intention to waive, signed by the party to
be charged, is made and delivered to the other party.
(c) No warranties or representations shall be deemed to have been
made by either party, except as expressly hereinabove set forth.
(d) Intentionally deleted.
(e) Licensee agrees that all disputes between the parties, if
litigated are to be litigated exclusively in the (i) Federal or State Courts
situated in New York, New York, or (ii) the courts located in London, U.K. The
parties waive any and all objection to venue in those courts. All process in any
action or suit arising under or in connection with this Agreement
15
may be served on Licensee by mail with the same force and effect as if served
personally in that place, and as if Licensee there maintained its principal
office.
(f) 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
16
having jurisdiction to make such determination, the remainder of this Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
EAGLE ROCK ENTERTAINMENT, PLC. PUSH RECORDS, INC.
By:_______________________________ By:_____________________________________
An Authorized Signatory An Authorized Signatory
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SCHEDULE A
Romeo Is Bleeding
Marigold Sky
Sky Is Falling
Out Of The Blue
Want To
Love Out Loud
Throw The Roses Away
I Don't Think So
Promise Ain't Enough
Time Won't Pass Me By
Hold On To Yourself
War Of Words
Hold On To Yourself (Club Mix)
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EXHIBIT "B"
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