Exhibit 10.3
RELEASE AND SETTLEMENT AGREEMENT
THIS RELEASE AND SETTLEMENT AGREEMENT (this "Agreement") is entered
into and becomes effective as of November 4, 2005, by and among NuTech Digital,
Inc. ("NuTech") and Xxxx Xxxx Touring, Inc. f/s/o Xxxx Xxxx ("Xxxx Xxxx").
NuTech and Xxxx Xxxx are referred to in this Agreement from time to time as the
"Parties."
RECITALS:
WHEREAS, the Parties entered into that certain Production Agreement as
of September 20, 2004 ("Production Agreement") with respect to the production
and filming of a Xxxx Xxxx concert in Las Vegas and NuTech's exploitation of
certain audio-visual products, including DVDs, based on that filmed concert (the
"Concert"), as more fully set forth in the Production Agreement;
WHEREAS, NuTech has produced an audio-only CD entitled "Xxxx Xxxx: Live
in Las Vegas" (the "CD") based on the soundtrack of the Concert and has
distributed that audio-only product, including SKU 64572 17308 (WEA Selection
No. 17308) ("#17308") and SKU 64572 17376 (WEA Selection No. 17376) ("#17376"),
through its distribution arrangement with Warner/Elektra/Atlantic Corporation
("WEA") since on or about August 2005;
WHEREAS, Xxxx Xxxx contends that the distribution of the CD by NuTech
was unauthorized and is in breach of the Production Agreement, which
specifically precludes any exploitation of any audio-only products based on the
Concert, including the CD;
WHEREAS, NuTech disputes Xxxx Xxxx'x contentions concerning the CD;
WHEREAS, the Parties desire to hereby reach a full and final compromise
and settlement of all claims relating to NuTech's exploitation of the CD and to
have their peace.
AGREEMENT
NOW, THEREFORE, in consideration of the terms, conditions and covenants
set forth herein, and other good and valuable consideration, receipt of which is
hereby acknowledged, the Parties hereto hereby agree as follows:
1. Payment to Xxxx Xxxx. Upon execution of this Agreement, NuTech
shall cause WEA to pay to Xxxx Xxxx the sum of one hundred thousand dollars
($100,000). The payment shall be made by wire transfer sent from WEA to the
client trust account of King, Holmes, Xxxxxxx & Xxxxxxxx, LLP. NuTech shall
direct WEA in writing, with a copy to Xxxx Xxxx, to make the $100,000 payment
and shall take all necessary steps and execute all necessary documents to insure
that the payment is made immediately upon execution of this Agreement, including
by immediately sending WEA a letter of direction in substantially the form
attached hereto as Exhibit A. The wire transfer instructions are:
East West Bank
1900 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000
ABA Number: 000000000
Account of King, Holmes, Xxxxxxx & Xxxxxxxx
Attorney-Client Trust Account
Account No. 00000000
Swift Code: XXXXXX00XXX
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2. Exploitation of Previously Shipped Units of the CD: Subject to
timely payment in full of the amount referenced in Paragraph 1 of this
Agreement, NuTech shall have the limited right to continue to distribute all
existing units of the CD that have been shipped by WEA to retailers prior to
September 30, 2005, which shall not exceed 42,078 units, subject to the terms of
this Agreement, including paragraph 3, below. NuTech acknowledges and agrees
that it shall have no right whatsoever to cause or authorize the manufacture of
any additional copies of the CD, that any existing inventory in NuTech's
possession, custody, or control that has not yet been shipped by WEA, including
all CDs held at WEA's facility in Gurnee, Illinois, shall be destroyed promptly
after execution of this Agreement, and that any units previously shipped by WEA
that have not been sold within eighteen months of the date of this Agreement
shall be promptly returned to Xxxx Xxxx directly by WEA and destroyed. NuTech
warrants and represents that to date it has only exploited the CD through its
distribution agreement with WEA and that it has not entered into any other
distribution arrangements with respect to the CD. NuTech further agrees that it
will not enter into any future agreements of any kind with respect to
exploitation of the CD or any other audio-only recordings embodying the
performances of Xxxx Xxxx, whether derived from the Concert or otherwise. NuTech
shall have the limited right for the eighteen-month period commencing with the
date of this Agreement to continue selling the CD from its website only,
provided that all inventory for NuTech's website sales shall be purchased by
NuTech from WEA; NuTech agrees that, upon expiration of the eighteen-month
period, NuTech shall remove all references to the CD from its website and will
not sell any further copies of the CD through its website. Except for the
website sales described above, NuTech will not engage in any other direct sales
of the CD at any time. NuTech warrants and represents that WEA has not
manufactured any copies of the CD and that the only manufacturer to date is L&M
Optical Disc West ("L&M") through its agreements with NuTech. Immediately upon
execution of this Agreement, NuTech shall request in writing, with a copy to
Xxxx Xxxx, that L&M cease and desist from any further manufacturing of the CD,
destroy all stampers of the CD in its possession, and return all masters and
parts to NuTech. NuTech shall timely provide Xxxx Xxxx with a copy of the
shipping invoice and other documents from L&M reflecting the return of the
masters and parts and the destruction of all stampers.
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3. Xxxx Xxxx Royalties for Shipped Units: Xxxx Xxxx shall receive a
royalty equal to $3.34 for #17308 and $3.47 for #17376 (collectively, "Macy's
Royalty") for every sale by WEA of the relevant CD, at any time, net of returns,
including under paragraph 2 of this Agreement. The above royalty amounts are
calculated in reference to the wholesale prices for the 42,078 units shipped by
WEA as of the date of this Agreement, as represented by NuTech. If any of those
shipped units are sold at a reduced wholesale price after the date of this
Agreement, Macy's Royalty for each unit sold at a reduced price shall be an
amount equal to fifty percent (50%) of the sum of seventy-eight percent (78%) of
the wholesale price, less manufacturing costs and publishing fees for the
relevant CD of $2.53 for #17308 or $2.02 for #17376, as applicable; provided,
however, that in no event shall Macy's Royalty be less than $1.67 for #17308 and
$1.93 for #17376. NuTech shall not approve or authorize any wholesale price for
the CD that is less than $7.53. There shall be no deductions whatsoever from
Macy's Royalty, including no deductions for any of NuTech's or WEA's or any
other third party's marketing, promotional, or production costs, including
production costs for any Xxxx Xxxx DVD products. Macy's Royalty shall be subject
to the same reserve rate that WEA applies to NuTech from time to time under its
distribution agreement with WEA, and the reserves applicable to Macy's Royalty
shall be liquidated on the same basis as WEA so liquidates for NuTech under
their distribution agreement. NuTech shall provide Xxxx Xxxx with a copy of each
accounting statement that NuTech receives from WEA under their distribution
agreement. NuTech shall provide copies of accounting statements to Xxxx Xxxx no
less than once each month and within three business days of NuTech's receipt of
each accounting statement from WEA. NuTech shall also request in writing to WEA,
with a copy to Xxxx Xxxx, that WEA copy Xxxx Xxxx on all accounting statements
concerning the CD sent to NuTech by WEA after the date of this Agreement and
shall take such other steps as may be necessary to insure that Xxxx Xxxx
receives those statements.
4. Recoupment of $100,000 Payment: NuTech shall have the right to
recoup the $100,000 payment set forth in paragraph 1 of this Agreement from
Macy's Royalty. Once the $100,000 payment is fully recouped, there shall be no
further recoupment of any other costs whatsoever, and Xxxx Xxxx shall receive
Macy's Royalty on all further sale or exploitation of the CD. NuTech shall pay
Xxxx Xxxx directly her royalties after recoupment, if any, by check made payable
to Xxxxxxx Xxxxx, p/k/a Xxxx Xxxx, and sent to the following address:
Xxxxxx Xxxxxxxx
GLWG
00000 Xxxxxxxx Xxxx. Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Tax Payer ID No.:###-##-####
Royalty payments shall be paid to Xxxx Xxxx no less than once every four weeks
for every four-week period in which royalties are due under this Agreement.
NuTech shall make the payments within ten days of receipt of each accounting
statement from WEA that reflects that additional royalties are due to Xxxx Xxxx
under this Agreement. Any failure by NuTech to timely make royalty payments when
due, as set forth above, shall constitute a material breach of this Agreement
for which NuTech shall be obligated to pay Xxxx Xxxx liquidated damages in the
amount of fifteen thousand dollars ($15,000), which amount the Parties agree
shall not be deemed a penalty of any kind and is a reasonable estimate of actual
damages suffered by Xxxx Xxxx as a result of any failure by NuTech to timely pay
Macy's Royalty when due. The liquidated damages shall be paid in addition to any
royalties owed to Xxxx Xxxx under this Agreement as a result of NuTech's failure
to make timely payment, or otherwise. The CD royalties payable under this
Agreement shall be accounted for separately and without relation to NuTech's
accounting to Xxxx Xxxx for sales of DVDs and other audio-visual products under
the Production Agreement. The CD account and the DVD account shall not be
cross-collateralized.
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5. No Right to Exploit the CD: Except for the limited right to exploit
previously shipped units of the CD, as set forth in paragraph 2 of this
Agreement, NuTech shall have no right to manufacture or exploit the CD or any
other audio-only Xxxx Xxxx products derived from the Concert or otherwise.
NuTech acknowledges and agrees that the Production Agreement does not give it
any rights to produce, sell, license, or otherwise exploit the CD or any other
audio-only products recorded at the Concert.
6. Copyright Assignment: Upon execution of this Agreement, NuTech shall
execute and provide to Xxxx Xxxx a notarized assignment of copyright
substantially in the form attached hereto as Exhibit B, assigning to Xxxx Xxxx
all of NuTech's right, title, and interest in and to the copyright in the sound
recording entitled "Xxxx Xxxx: Live in Las Vegas," as well as any and all
audio-only versions of any footage or other recordings in NuTech's possession,
custody, or control embodying the performances and/or voice of Xxxx Xxxx. At the
time this Agreement is executed by NuTech, NuTech shall provide Xxxx Xxxx with a
copy of all such audio-only recordings in its possession, custody, or control
for purposes of copyright registration. The Parties shall arrange a mutually
convenient time to meet at King, Holmes, Xxxxxxx & Xxxxxxxx LLP for purposes of
NuTech's execution of the agreement and delivery of the above materials.
7. Time of the Essence: Time is of the essence with respect to all
obligations of the Parties under this Agreement, including the obligations set
forth in paragraphs 1-6.
8. Payment a Material Term: Timely payment in full of the $100,000
amount set forth in paragraph 1 of this Agreement is a material term and
condition precedent to this Agreement. In the event that Xxxx Xxxx does not
receive the payment immediately upon execution of this Agreement, this
Agreement, including the mutual general releases set forth in paragraph 9 of
this Agreement, shall be null and void and without any force or effect.
9. Mutual General Releases. Effective as of the date hereof, and except
for obligations arising out of this Agreement, Xxxx Xxxx Touring, Inc., f/s/o
Xxxx Xxxx, for itself, and for its respective officers, directors, partners,
shareholders, subsidiaries, agents, representatives, employees, servants,
attorneys, successors in interest, personal representatives, heirs, legatees,
devisees, assigns, and each of them ("Xxxx Xxxx Releasors"), hereby absolutely,
fully and forever waive, release and discharge NuTech Digital, Inc., and its
respective officers, directors, partners, shareholders, subsidiaries, agents,
representatives, employees, servants, attorneys, successors in interest,
personal representatives, heirs, legatees, devisees, assigns, and each of them,
whether past, present or future ("NuTech Releasees"), of and from any and all
actions, causes of action, suits, claims, demands, liabilities, obligations,
losses, controversies, costs, expenses, attorneys' fees, damages, or judgments
of every kind, nature, character or description whatsoever, whether in law or in
equity, and whether known or unknown, suspected or unsuspected, which the Xxxx
Xxxx Releasors may now have, or at any time may have had, or which at any time
hereafter may have or claim to have against the NuTech Releasees, prior to the
date hereof arising out of or relating to NuTech's production and exploitation
of the CD.
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Effective as of the date hereof, and except for obligations arising out
of this Agreement, NuTech Digital, Inc., for itself, and for its respective
officers, directors, partners, shareholders, subsidiaries, agents,
representatives, employees, servants, attorneys, successors in interest,
personal representatives, heirs, legatees, devisees, assigns, and each of them
("NuTech Releasors"), hereby absolutely, fully and forever waive, release and
discharge Xxxx Xxxx Touring, Inc., f/s/o Xxxx Xxxx, and its respective officers,
directors, partners, shareholders, subsidiaries, agents, representatives,
employees, servants, attorneys, successors in interest, personal
representatives, heirs, legatees, devisees, assigns, and each of them, whether
past, present or future ("Xxxx Xxxx Releasees"), of and from any and all
actions, causes of action, suits, claims, demands, liabilities, obligations,
losses, controversies, costs, expenses, attorneys' fees, damages, or judgments
of every kind, nature, character or description whatsoever, whether in law or in
equity, and whether known or unknown, suspected or unsuspected, which the NuTech
Releasors may now have, or at any time may have had, or which at any time
hereafter may have or claim to have against the Xxxx Xxxx Releasees, prior to
the date hereof arising out of or relating to NuTech's production and
exploitation of the CD.
10. No Assignment of Claims. The Parties to this Agreement warrant and
represent to one another that they have not assigned or transferred, or will in
the future assign or transfer, either voluntarily or involuntarily, any claim,
cause of action, or right based on, arising out of, or in connection with this
Agreement whether potential, known or unknown, foreseen or unforeseen that is
being released pursuant hereto.
11. Effect of Settlement Agreement. This Agreement is entered into by
and between the Parties hereto solely for the purpose of compromising and
settling certain matters in dispute. It does not constitute, nor shall it be
construed to constitute, an admission by any of the Parties hereto of the truth
or validity of any claims asserted by the Parties.
12. No Effect on Audio-Visual Products: This Agreement, including the
mutual general releases set forth in paragraph 9 herein, shall not be deemed to
alter, modify, release, or otherwise affect the Parties' respective rights,
obligations, or liabilities under the Production Agreement with respect to the
exploitation of DVDs or other audio-visual products.
13. Necessary Documents. The Parties agree to execute and/or file any
and all documents necessary to fully comply with the terms, condition, spirit
and intent of this Agreement.
14. Notices: Unless otherwise specifically provided in this Agreement,
all notices, demands, requests, approvals or other communications (collectively
and severally called "Notices") given with respect to this Agreement, shall be
in writing, and shall be given by: (1) personal delivery (which form of Notice
shall be deemed to have been given upon delivery), (2) by telegraph or by
private airborne/overnight delivery service (which forms of Notice shall be
deemed to have been given upon confirmed delivery by the delivery agency) or (3)
by electronic or facsimile transmission, provided the receiving party has a
compatible device or confirms receipt thereof (which forms of Notice shall be
deemed delivered upon confirmed transmission or confirmation of receipt).
Notices shall be addressed to the parties as follows:
Xxxx Xxxx: Xxxx Xxxx Touring, Inc. f/s/o Xxxx Xxxx
x/x Xxxx, Xxxxxx, Xxxxxxx & Xxxxxxxx, XXX
0000 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
(000) 000-0000 telephone
(000) 000-0000 facsimile
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NuTech: NuTech Digital, Inc.
0000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn.: Xx. Xxx Xxxxxx
Fax: 000-000-0000
15. Waiver, Modification and Amendment. No provision of this Agreement
may be waived until it is done so in writing and signed by all Parties hereto.
Waiver of any one provision herein shall not be deemed to be a waiver of any
other provision herein. This Agreement may be modified or amended only by a
written agreement executed by all of the Parties hereto.
16. Agreement Not Binding Until Executed: This Agreement is not binding
and shall have no force or effect until it is fully executed by all Parties,
payment in full has been made to Xxxx Xxxx under paragraph 1 of this Agreement,
and copies of all sound recordings have been provided to Xxxx Xxxx pursuant to
paragraph 6 of this Agreement.
17. Construction, Jurisdiction and Enforcement. This Agreement shall be
construed in accordance with, and governed by the laws of the State of
California. In the event this Agreement must be enforced by a court of law, the
Parties hereby agree that such action shall be tried by a court of the State of
California, County of Los Angeles, and that the prevailing party in any such
action will be entitled to recover its reasonable attorneys' fees and costs
incurred in enforcing the terms of this Agreement.
18. Execution. This Agreement may be executed in counterparts. All
counterparts when executed shall constitute one agreement binding on all
Parties. A faxed copy of this Agreement may be deemed an original. Each Party
represents and warrants to the other that the person signing the agreement is
fully authorized to do so on behalf of that Party.
19. Titles and Captions. Paragraphs, titles and captions contained in
this Agreement are inserted only as a matter of convenience and for reference,
and in no way define, limit, extend or describe the scope of this Agreement or
the intent of any provision herein.
20. Construction of Agreement: The language of all parts of this
Agreement shall in all cases be construed as a whole according to its fair
meaning, and not strictly for or against either of the parties. The parties
acknowledge that each was represented by counsel in the negotiation of this
Agreement and that this Agreement was drafted jointly by such counsel.
21. Entire Agreement. This Agreement contains the sole and entire
agreement and understanding of the Parties, and any and all prior discussions,
negotiations, commitments and understandings related hereto are hereby merged
herein. No representations, oral or otherwise, expressed or implied, other than
those contained herein have been made by any Party hereto. No other agreements
not specifically referred to herein, oral or otherwise, relating to this
Agreement, shall be deemed to exist or to bind any of the Parties hereto.
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IN WITNESS WHEREOF, the undersigned hereby agree to the terms,
conditions and covenants set forth above, and their attorneys indicate their
approval as to the form of this Agreement and its execution by their respective
signatures in the appropriate spaces below, as of the date first above-written.
--------------------------------------------------------------------------------
NuTech Digital, Inc. Xxxx Xxxx Touring, Inc., f/s/o Xxxx Xxxx
By: By:
---------------------------------- -------------------------------------
Xxx X. Xxxxxx, CEO/President Xxxx Xxxx
-------------------------------------
Xxxx Xxxx
--------------------------------------------------------------------------------
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EXHIBIT A
LETTER OF DIRECTION
November 13, 2005
Warner-Elektra-Atlantic Corporation
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx
Gentlemen:
NuTech Digital, Inc. ("NuTech") has entered into a settlement agreement
with Xxxx Xxxx Touring, Inc. f/s/o Xxxx Xxxx ("Xxxx Xxxx") pursuant to which
NuTech is obligated to pay certain sums and to make certain royalty payments to
Xxxx Xxxx.
NuTech hereby requests and irrevocably authorizes and directs
Warner-Elektra-Atlantic Corporation ("WEA") to pay Xxxx Xxxx, on its behalf, the
sum of One Hundred Thousand Dollars (US $100,000.00) ("Payment"). Such Payment
shall be made promptly following the complete execution of this Letter of
Direction. The Payment to Xxxx Xxxx shall constitute payment to NuTech for all
purposes under the distribution agreement between Nutech and WEA.
Subject to and contingent upon Xxxx Xxxx'x timely receipt of the
$100,000 Payment, and provided that WEA does not sell more than 43,000 units of
the Product (as defined below), Xxxx Xxxx hereby withdraws the demand to cease
and desist from distributing the product "Xxxx Xxxx: Live in Las Vegas,"
selection numbers 17308 and 17376 (the "Product") made to the Warner Music Group
set forth in the letter from Xxxx Xxxxxx, dated September 30, 2005, and hereby
permits WEA to resume distribution of the existing inventory of Product
(estimated to be 42,078 units), but not to ship any additional units of the
Product. In addition, Xxxx Xxxx, on behalf of herself and her former and present
agents, managers, representatives, assigns, predecessors, successors, related
entities, employees, heirs, executors, administrators and attorneys
(individually and collectively, the "Xxxx Xxxx Parties"), discharge WEA, and its
former and present shareholders, members, officers, directors, agents, managers,
representatives, assigns, predecessors, successors, parent companies (including,
without limitation, Warner Music Inc. and Warner Music Group Corp.),
subsidiaries, labels, affiliates, related entities, licensees, distributors,
retailers, employees, administrators and attorneys (individually and
collectively, the "WEA Parties"), from and of any and all claims, demands,
actions, causes of action, suits, sums of money, accounts, covenants,
agreements, contracts and promises, in law or in equity, which the Xxxx Xxxx
Parties had, now have or may hereafter have against the WEA Parties, whether
sounding in contract, tort, or otherwise, arising from the beginning of the
world through the date of this letter agreement, that arises out of, concerns or
relates in any way to the manufacture, distribution and exploitation of the
Product.
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The immediate Payment of $100,000 under this authorization will be
remitted to Xxxx Xxxx by wire transfer pursuant to the following wire transfer
instructions:
East West Bank
1900 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000
ABA Number: 000000000
Account of King, Holmes, Xxxxxxx & Berliner
Attorney-Client Trust Account
Account No. 00000000
Swift Code: XXXXXX00XXX
Tax Payer ID No.: 00-0000000
--------------------------------------------------------------------------------
Very truly yours,
-------------------------------
Xxx Xxxxxx, CEO/President
NuTech Digital, Inc.
-------------------------------
Date
--------------------------------------------------------------------------------
AGREED TO INSOFAR AS IT CONCERNS US:
Warner/Elektra/Atlantic Corporation
By:
-----------------------------
Name:
Its:
--------------------------------
Xxxx Xxxx
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EXHIBIT B
ASSIGNMENT OF COPYRIGHT
ASSIGNOR: NuTech Digital, Inc.
ASSIGNEE: Xxxx Xxxx Touring, Inc.
For good and valuable consideration, receipt of which is hereby
acknowledged, ASSIGNOR hereby assigns, transfers, and sets over unto ASSIGNEE
and its successors and assigns, one hundred percent (100%) of ASSIGNOR's right,
title, and interest in the universe-wide copyright in and to the sound recording
entitled "Xxxx Xxxx: Live in Las Vegas," as well as any and all audio-only
versions of any footage or other recordings in NuTech's possession, custody, or
control embodying the performances and/or voice of Xxxx Xxxx, together with all
renewals and extensions thereof throughout the universe.
IN WITNESS WHEREOF, the undersigned has executed the foregoing
Assignment as of this ___ day of November 2005.
---------------------------------------
ASSIGNOR
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On ____________________, before me, ____________________, a Notary
Public in and for said County and State, personally appeared
____________________, proved to me on the basis of satisfactory evidence to be
the person whose name is subscribed to the within instrument, and acknowledged
to me that he executed the same in his authorized capacity and that by his
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
-------------------------------
Signature of Notary
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