NATIONAL DISTRIBUTION AND
WAREHOUSING AGREEMENT
THIS NATIONAL DISTRIBUTION AND WAREHOUSING AGREEMENT (this "Agreement") is made
and entered into effective as of the 18th day of January, 2001 (the "Effective
Date"), by and between NAVARRE CORPORATION, a Minnesota corporation ("Navarre")
and BODYGUARD XXXXXXX.XXX, INC., a Delaware corporation ("Label") (collectively,
Navarre and Label shall be referred to as the "Parties").
RECITALS:
WHEREAS, Navarre is a wholesale distributor of musical, literary, and artistic
sound recordings on various forms of recording media;
WHEREAS, Label has released, and will release during the term of this Agreement,
certain recordings for sale and distribution in the "Territory" (as defined
below); and
WHEREAS, Label's proper legal title and registered business address are as
follows:
BODYGUARD XXXXXXX.XXX, INC.
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Label Name
000 XXXXXX XXXXXX
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Xxxxxx Xxxxxxx
Xxx Xxxx XX 00000
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City State Zip
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: _________________________
WHEREAS, Label desires to grant to Navarre certain rights relating to Label's
sound and video recordings, including but not limited to exclusive distribution
rights within the Territory, and Navarre desires to accept the same, in
accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and mutual promises set forth in this Agreement, the Parties agree as follows:
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DEFINITIONS:
"Artists" shall mean those performing artists who recorded the Masters.
"Base Price" shall mean the price of the Recordings to Navarre, as set forth on
Schedule A, unadjusted for any discounts, credits or rebates described in this
Agreement.
"Catalog" shall mean Label's collection of Recording titles provided to Navarre
pursuant to this Agreement.
"Compositions" shall mean the musical and other sound or video compositions
embodied in the Masters.
"Consigned Product" shall mean Recordings that Navarre is holding in its
warehouse as inventory that has not been sold by Navarre to any Resellers, or
Returned Goods that have been processed by Navarre and placed in inventory for
resale.
"Contract Year" shall mean each January 18 through January 17 during the Term of
this Agreement.
"Deleted Recordings" shall mean Recordings deleted from Label's Catalog in
accordance with Section 8.
"DELIVERY MINIMUM" shall mean the minimum number of Releases Label is to provide
to Navarre during each Contract Year as set forth in Section 3.1.
"Documents" shall mean this Agreement and any and all other documents by and
between Navarre and Label, including, without limitation, any promissory notes
and security and financing agreements and/or financing statements.
"Growth Incentive Rebate" shall mean the rebate paid to Label by Navarre, if
any, after the end of each Contract Year based on Navarre's Net Sales to Label
during that Contract Year. The amount of any Growth Incentive Rebate for a given
Contract Year shall be determined in accordance with Schedule A.
"Manufacturing Services Agreement" if applicable, the Manufacturing Services
Agreement by and between Label and Navarre relating to the Recordings.
"Masters" shall mean the master sound or video recordings owned or controlled by
Label from which the Recordings are derived.
"Net Sales" shall mean the dollar value of all sales, net of Returned Goods,
during a given Contract Year. The Net Sales figure shall not be net of
applicable manufacturing, printing, promotional, advertising or administrative
costs for that year.
"Printing Services Agreement" if applicable, the Printing Services Agreement by
and between Label and Navarre relating to the Recordings.
"Publisher" shall mean any Artist, producer, label or music publishing company
with which Label is affiliated, either by contract, common ownership or
otherwise, that has an ownership or control interest in the Compositions,
Recordings or Masters.
"Recordings" shall mean all music and other sound or video recordings, and any
and all copies thereof, which are (i) owned or controlled, in whole or in part,
directly or indirectly, by Label as of the effective date of this Agreement and
at any other time during the Term of this Agreement, and (ii) recorded on any
recording media, including but not limited to compact discs ("CD's"), cassettes,
digital video discs ("DVD's") and other forms of recording media now known or
later developed in which music and other sounds or video are fixed or recorded
by any method now known or later developed. A partial listing of the Label's
Catalog of Recordings and the respective UPC codes are set forth on Schedule B.
"Releases" shall mean any and all titles of Recordings which Label is providing
to Navarre for the first time.
"Resellers" shall mean all wholesale and retail outlets, one stops, rack
jobbers, military and wholesale clubs, sub-distributors or any other third
parties who would customarily purchase through a distributor.
"Returned Goods" shall mean Recordings previously sold by Navarre that have been
returned to Navarre by its customers.
"RETURN RESERVES" shall mean a certain designated percentage of the Base Price
of all Sold Goods which shall be retained by Navarre in the Return Reserves
Account, as such account shall be adjusted from time to time. Initially, the
Return Reserves rate shall be twenty-five percent (25%) of the Base Price.
"Return Reserves Account" shall mean the account held by Navarre as a reserve to
cover its projected costs associated with Returned Goods.
"Sold Goods" shall mean all Recordings that have been sold by Navarre and
shipped from its warehouse to Resellers.
"Term" shall have the definition set forth in Section 1.1.
"TERRITORY" shall mean the United States and Canada.
"Titles" shall mean the individual tracks on Recordings.
"Weekly Summary Report" shall mean the weekly report provided to Label by
Navarre stating by SKU the aggregate volume of Sold Goods from Monday through
the last business day of the previous week. The Weekly Summary Report shall also
describe the remaining aggregate Consigned Product as of the last business day
of the previous week as well as identify quantities and titles of Returned Goods
received by Navarre during that week.
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1. APPOINTMENT AND SCOPE.
1.1. TERM. The initial term of this Agreement shall be for approximately
three years from the Effective Date of this Agreement, ending on the
17`" day of January , 2004. Thereafter. this Agreement will
automatically renew for successive one year periods unless and until
(i) either Party provides the other with written notice of non-renewal
at least 90 days prior to the expiration of the initial or renewal
term, as the case may be, or (ii) this Agreement is otherwise
terminated as provided in Section 14. The initial term and all
subsequent renewal terms, if any, shall hereinafter be collectively
referred to as the "Term."
1.2. EXCLUSIVE DISTRIBUTION. Label appoints Navarre as its exclusive
distributor in the Territory for the sale and distribution of all of
Label's Recordings, including but not limited to sales made to
Resellers, sales made through the Internet, and sales made through
electronic transfers to retail outlets or directly to consumers. Such
appointment also includes, on a non-exclusive basis, sales made
through digital distribution as described in Addendum I, unless
Addendum I has been intentionally omitted. Label represents that all
names under which it or any subsidiary or affiliate of Label currently
markets Recordings are listed on Schedule 1.2, and Label acknowledges
that such subsidiaries and affiliates and any additional label names
created by Label or such subsidiaries and affiliates during the Term
are bound by the terms of this Agreement as though each are original
signatories hereto.
1.3. RESERVATION OF DISTRIBUTION RIGHTS. Label reserves the right to sell
its Recordings at concerts and through its Website(s) provided that
such sales (i) are not made to Resellers, and (ii) satisfy the
requirements of Section 4.1.4 of this Agreement.
2. NAVARRE OBLIGATIONS.
2.1. Navarre shall use its best efforts to promote, distribute and sell the
Recordings in the ordinary course of its business.
2.2. Navarre shall maintain suitable offices, warehousing facilities and
adequate staffing for the performance of its duties under this
Agreement. Navarre shall conduct its business in its own name and
shall pay all of its own costs and expenses except as otherwise noted
in this Agreement.
2.3 Navarre shall respect the musical, dramatic, artistic and literary
rights of Label. Navarre shall also respect the property rights of
Label and any Publisher in the Recordings and any trade names,
trademarks, logos or other information supplied with or made a part of
the Recordings or related promotional materials.
2.4. Navarre shall promptly pay Label in accordance with the payment
provisions of this Agreement.
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2.5. Navarre shall use its best efforts to make available to Label
manufacturing and printing services for all forms of CD's, DVD's and
cassettes in accordance with the pricing and terms provided in the
Manufacturing Services Agreement and Printing Services Agreement, if
applicable.
2.6. Navarre will provide Label with a physical inventory upon request but
not more frequently than semi-annually. Label shall also have the
right to make its own physical inspection of inventory during
Navarre's normal business hours upon reasonable advance notice.
3. LABEL'S OBLIGATIONS.
3.1 Label shall provide Navarre with a minimum of 5 Releases during each
Contract Year.
3.2. Label shall accept orders from Navarre for the consignment of
Recordings, whether manufactured pursuant to the terms of
Manufacturing Services Agreement or otherwise, and shall promptly
deliver against those orders. Recordings will be supplied in industry
acceptable packaging with appropriate UPC stickers or labeling.
3.3. Label shall reorder Recordings for delivery to Navarre, as reasonably
required to maintain adequate inventory, based on the shipping report
issued each week and the order requests issued to Label by Navarre.
Label SHALL CONSIGN AN INVENTORY of Recordings to Navarre sufficient
to allow both parties to comply with the terms of this Agreement;
provided, however, Navarre shall in no event be required to warehouse
Consigned Product in excess of quantities requested in advance by
Navarre.
3.4. Label shall provide Navarre with promotional and advertising materials
for the Recordings, at no cost to Navarre and in quantities mutually
agreed upon to be reasonably sufficient to promote and advertise the
Recordings, but in no event shall Label be required to provide such
goods in excess of limitations imposed on Label by recording
agreements with Artists.
3.5. Label agrees that new pressings covered under the terms of this
Agreement shall include the statement "Distributed by Navarre
Corporation, Xxxxxxxxxxx, XX 00000."
3.6. During the Term of this Agreement, Label shall (i) immediately notify
Navarre of any disputes or disagreements Label may have with any
Publishers or others which might have a material adverse impact on
Navarre's or Label's ability to perform under this Agreement, and (ii)
if so requested by Navarre, require all Publishers under contract with
Label to execute a waiver and release in form and substance
satisfactory to Navarre.
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3.7. Label shall pay to Navarre an annual administrative fee of $5000 in
consideration of the performance of administrative, accounting and
other services provided by Navarre pursuant to this Agreement. Such
fee shall be debited by Navarre against the first sums due and owing
by Navarre to Label. Such fee shall thereafter be due on the first day
of each Contract Year during the Term.
3.8. Except as otherwise provided in this Agreement, Label shall be solely
responsible for making direct payment to all copyright proprietors of
mechanical and other copyright royalties relating to Compositions
incorporated into the Recordings. Label shall make such payments when
due and at the required statutory or contract rates, as applicable. On
a semi-annual basis, or more frequently if requested by Navarre, Label
shall provide such documentation as Navarre may require to evidence
that such payments have been and are being timely made, including
acknowledgment of receipt of payment by the recipient.
4. PRICING; RESERVES; PAYMENT
4.1. Pricing. In consideration of the rights granted hereunder and the
obligations and covenants of the Parties set forth herein,
Navarre shall pay to Label the Base Price for each Recording sold
by Navarre to its customers calculated in accordance with
Schedule A hereto, less any applicable discounts.
4.1.1. RETAIL PRICE. The current suggested retail prices for the
Recordings are shown on Schedule A. Label may change the
suggested retail price on a prospective basis by issuing new
pricing sheets to Navarre to reflect price changes and new
Releases. The new retail pricing, and the corresponding
change to the Base Price, shall go into effect thirty (30)
days after receipt by Navarre of the new pricing sheets.
4.1.2. DISCOUNTS. Label also agrees to participate in the
following discount programs, with Base Prices for Recordings
sold pursuant to such discount programs reduced as set forth
below:
4.1.2.1. Standard discount for Navarre's sales to
rack jobbers, which is currently five
percent (5%) off the Base Price.
4.1.2.2. Standard discount for Navarre's sales to
military bases and installations, which is
currently ten percent (10%) off the Base
Price.
4.1.2.3. Label shall participate in Navarre's
"Catalog Program." Navarre's Catalog Program
shall apply to all Recording titles which
were originally released by Label to Navarre
more than six (6) months earlier and are not
on any current billboard chart. During the
first two (2) months of a calendar quarter,
Label's participation shall be at a discount
rate of five percent (5%) off
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the Base Price. In the last month of the
quarter, Label's participation shall be at
the rate of seven percent (7%) off the Base
Price. Catalog Program sales shall have an
additional sixty (60) days dating.
Accordingly, payments due by Navarre to
Label for these items shall be paid within
one hundred fifty (150) days from the
invoice date.
4.1.3. PROMOTIONAL MATERIALS. Navarre shall not be required to
make any payment to Label for Recordings furnished free of
charge by Label or Navarre to third parties for non-resale
purposes such as review, sample, advertisement, publicity,
promotion or like purposes, or for Recordings sold at or
below their manufacturing cost.
4.1.4. PRICE PROTECTION FOR CONSIGNED PRODUCT. In the event that
Label offers Recordings to any third party in the Territory
at a lower price than the Base Price charged to Navarre for
such Recordings, including raising the discount offered,
Label shall immediately adjust its pricing charged to
Navarre for the difference between the invoice price
charged to Navarre and the reduced price for all copies of
such Recordings) held as Consigned Product on and after the
date the reduced price is first offered and for so long as
such reduced price is in effect. In addition, Label agrees
that its pricing for ANY RECORDINGS OUTSIDE THE TERRITORY
SHALL BE CONSISTENT WITH the pricing to Navarre within the
Territory (e.g., Recordings categorized as "Top-Line
Products," "Mid-Line Products," or "Discount Products"
shall be priced as such both inside and outside the
Territory) and any reclassification or material price
change for Recordings outside the Territory shall also
automatically apply to Navarre within the Territory. The
provisions of this Section 4.1.4 shall not apply to Label's
sale of Recordings outside of the Territory if Label can
demonstrate that no significant amount of such Recordings
will ultimately end up being sold within the Territory.
4.1.5. PRICE PROTECTION FOR SOLD GOODS. If Navarre's customers
request a credit resulting from Label's price reduction on
Sold Goods, Label shall credit Navarre for the difference
between the invoice price charged to Navarre and the
reduced price for each unit of Sold Goods which are sold to
Navarre's customers on the date the reduced price is first
offered by Label or while the reduced price is still in
effect. Should any of Navarre's customers request a price
adjustment as outlined in this Section 4.1.5, Navarre
shall, at Label's request, provide for an independent third
party audit of that customer's inventory at Label's
expense. Navarre will use commercially reasonable efforts
to provide inventory reporting of its customer's inventory.
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4.2. WEEKLY SUMMARY REPORT. Navarre shall provide a Weekly Summary
Report to Label on a weekly basis.
4.3. INVOICES. Each week during the Term, Label shall issue an invoice
to Navarre based on the gross total of Sold Goods from the prior
week as set forth in the Weekly Summary Report. In addition to any
other discounts, Navarre shall receive a two percent (2%) discount
on invoice payments made to Label within 90 days of Navarre's
receipt of such invoice. Payments made on invoices coming due
during a given week shall be deemed made within ninety (90) days
if mailed to Label by the end of the preceding week. Navarre shall
receive such two percent (2%) discount on invoices relating to
Recordings sold pursuant to Navarre's Catalog Program if such
payments are made to Label within one hundred fifty (150) days of
Navarre's receipt of the invoice.
4.4 RETURN RESERVES. During the Term of this Agreement, prior to
paying the invoice amount set forth in Section 4.3, Navarre shall
be entitled to deduct Return Reserves from the invoice amount and
hold such sum in the Return Reserve Account.
4.4.1. The Return Reserve amount shall initially be twenty-five
percent (25%) of the Base Price (as adjusted from time to
time) on all copies of Recordings sold by Navarre.
Commencing on the sixth month of this Agreement and
continuing thereafter for the remainder of the Term, the
Return Reserve percentage shall be revised monthly to
reflect the actual percentage of Sold Goods returned to
Navarre during the previous six months; provided, however,
that the Return Reserve percentage shall never be less than
twenty percent (20%) nor more than thirty percent (30%).
4.4.2. At Label's request, beginning in the seventh month of the
Term, if the actual percentage of returns during the
previous six months is less than the Return Reserve
percentage then in effect, Navarre shall begin to liquidate
the Return Reserve Account by liquidating the amount taken
in the first (1st) month of the Term and reporting that
liquidation on the invoice statement for the seventh (7th)
month, and on such basis thereafter. By way of
illustration, in the eighth (8th) month of this Agreement,
the Return Reserve amount taken in the second (2nd) month
shall be liquidated and credited on the invoice statement
for the eighth month, in the ninth (9th) month of this
Agreement, the Return Reserve amount taken in the third
(3rd) month shall be liquidated and credited on the invoice
statement for the ninth month and so forth. Upon its being
liquidated and reported, the applicable Return Reserve
amount shall be applied and credited to Label's account.
The Return Reserve Account shall be reduced by the amount
so applied. Notwithstanding the foregoing, during the last
Contract Year of the Term or as provided for in Section 14
of this Agreement, all amounts held in the Return Reserve
Account shall continue to be held by Navarre
until it has been paid in full for any and all amounts that
Label owes to it under the terms of this Agreement or any
ancillary Documents.
4.4.3. If at any time Navarre determines in its reasonable
judgment that its anticipated return liability for
Recordings exceeds the projected amount in the Return
Reserves Account at the end of the Term, Navarre shall be
entitled to deduct amounts from remaining invoices as
Navarre deems sufficient to offset the anticipated excess
liability. Such amounts shall be held in the Return Reserve
Account.
4.5. PAYMENTS
4.5.1. INVOICE PAYMENTS. Navarre shall pay Label the Base Price of
all Sold Goods each week as shown on the invoice, less the
Return Reserves, less any other applicable discounts set
forth in this Section 4, less manufacturing and printing
costs (if applicable) and less agreed upon promotional and
administrative costs. Further, if the Return Reserve
Account is ever in a debit balance during the Term of this
Agreement because of excessive returns (and not because of
manufacturing, promotion or other costs which may otherwise
be due to Navarre from Label), Navarre shall be entitled to
withhold the sum necessary to bring the Return Reserve
Account to a zero balance.
For Example:
WEEK 1 SALES
Navarre Base Cost
= 7.72 x 1,000 = $ 7,720.00 Gross Sales for Week
- 1,930.00 For Return Reserve (at 25%)
- 800.00 Manufacturing Cost
- 300.00 Advertising Cost
$ 4,690.00 Net to Label
WEEK 2 SALES
Navarre Base Cost
= 7.72 x 800 = $ 6,176.00 Gross Sales for Week
but returns of Sold Product
= $4,000.00 then - 1,544.00 For Return Reserve (at 25%)
640.00 Manufacturing Cost
160.00 ADVERTISING COST
3,832.00 Due to Label
526.00 Cover Return Debit
$3,306.00 Net to Label
Note* Week 2
Return Reserve Account = $3,474.00
4.000.00 Returns
526.00
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4.5.2. GROWTH INCENTIVE PAYMENTS. Within 30 days after the end of
each Contract Year, Navarre shall pay to Label a Growth
Incentive Rebate fee, if any, based on Navarre's Net Sales
made to Label during that Contract Year. Any Growth
Incentive Rebate fee payable to Label by Navarre shall be
calculated in accordance with Schedule A. If the actual
amount paid to Label for a given Contract Year is in excess
of the amount due Label hereunder, Navarre may, at its
option, either (i) require Label 'to remit the overage to
Navarre within 30 days or (ii) deduct the overpayment from
the next payments) that would otherwise be payable to
Label.
5. RETURNS.
5.1. RETURNED GOODS; CREDIT FOR RETURNED GOODS. Navarre shall debit
Label's account for the Base Price plus all return freight charges
for all Returned Goods. Returned Goods shall be processed by
Navarre, placed in inventory for resale and deemed Consigned
Product; provided, however, that if Returned Goods cannot be
resold because the packaging or the product is damaged, Navarre
shall destroy such Returned Goods and charge Label its actual fees
incurred for the destruction and disposal of such Returned Goods
(e.g. $0.05 -.20 per unit).
5.2. RIGHT TO RETURN OR DESTROY CONSIGNED PRODUCT. If Navarre has
excess Consigned Product in its warehouse it shall have the right
to, at its option, either (i) xxxx such excess Consigned Product
(to evidence that it may not be returned to Navarre for credit)
and return it to Label, at Label's own expense, or (ii) if not
accepted for return by Label, destroy such Consigned Product and
charge Label its actual fees incurred in the destruction and
disposal of such Consigned Product (e g. $0.05 -.20 per unit),
recognizing that the rights granted hereunder are an exclusive
right to distribution. Navarre's right to return Consigned Product
shall survive the Term and termination of this Agreement. Should
Label owe Navarre a balance upon reconciliation of its account for
Returned Goods, freight chargebacks, advertising credits, or other
costs upon the end of the Term or termination, Label shall issue
payment therefor within 30 days of the end of such Term or
termination. If Label has made full payment of all amounts due
Navarre, Navarre shall use its best efforts to return all
Consigned Product within 180 days of the termination date of the
Agreement. If full payment has not been made, Navarre shall be
entitled to immediately exercise its remedies hereunder including
those set forth in Sections 14 and 15.
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6. ACCOUNTING.
6.1. ACCOUNTING.
6.1.1. Navarre shall provide Label with a reconciliation statement
of all amounts payable to Label hereunder within 30 days of
the end of each Contract Year. All such reconciliation
statements rendered by Navarre shall become incontestable
by Label and Label will neither have nor make any claim
against Navarre with respect to such reconciliation
statement unless prior to ninety (90) days after the
rendering of such reconciliation statement Label advises
Navarre in writing of any objection to such reconciliation
statement, setting forth the specific basis for objection,
in which case such reconciliation statement shall be
incontestable in all respects except those stated in such
written objection.
6.1.2. Navarre shall keep books and records showing the
transactions made pursuant to this Agreement. Navarre's
books and records supporting receipts of Recordings,
shipments of Recordings, and all charges applicable to
Label shall be open to inspection during Navarre's normal
business hours upon reasonable advance notice.
6.2. AUDIT RIGHTS. Label shall have the right, at Label's expense, to
engage an independent certified public accountant, not then
conducting or participating in an audit of Navarre's books, to
audit relevant portions of Navarre's books and records pertaining
to monies payable to Label pursuant to this Agreement that have
not been rendered incontestable. Label shall be entitled to
conduct such audits not more than once during any twelve month
period. All such audits shall be conducted during Navarre's normal
business hours and upon reasonable advance notice, and no such
audits shall be conducted on a contingent fee arrangement.
7. CONSIGNMENT OF INVENTORY.
7.1 Label shall deliver on consignment to Navarre's warehousing
facilities an inventory of Recording titles requested by Navarre
and in amounts mutually determined by Navarre and Label. Label and
Navarre shall consult regarding the timing and size of
manufacturing orders for purposes of coordinating availability of
adequate inventory in accordance with the terms and conditions of
this Agreement, but Navarre shall at all times have the sole
authority to determine the amount of inventory stored at its
premises, and any excess inventory shall be returned to Label or
destroyed pursuant to Section 5.2 above.
7.2. Subject to Navarre's rights under Sections 14 and 15 below, Label
shall retain title to and ownership of all Recordings delivered by
it to Navarre until sold. Navarre shall, at its own expense, while
the Recordings are in Navarre's possession at its warehouse,
obtain insurance sufficient to protect Label against all
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risks of loss or damage to the Recordings while in Navarre's
possession, and Navarre shall have Label named as an additional
insured under such policy.
7.3. Label shall be responsible for payment of shipping costs for
delivery of the Recordings to Navarre, and Label shall pay the
shipping costs for any authorized return of Sold Goods to Navarre
or Label (Returned Goods will be shipped freight collect).
7.4. Navarre shall pay those expenses incurred after delivery of
Recordings to Navarre which relate to insurance, warehousing and
shipment of Recordings.
7.5. Shipment discrepancies between the invoice/xxxx-of-lading provided
by Label, and any damage in transit, will be promptly reported.
8. DELETED RECORDINGS.
8.1. Label shall have the right to delete certain Recordings from its
Catalog ("Deleted Recordings"). Label shall give Navarre no less
than thirty (30) days prior written notice of the date when a
particular Recording will be deleted from its Catalog. Navarre
shall have nine (9) months from the Notice Date (as defined below)
applicable to each particular Deleted Recording to recall from its
customers all such Deleted Recordings. Label shall then have
thirty (30) days from the end of such nine (9) month period to
remove, at Label's expense, all such Deleted Recordings from
Navarre's warehouse facility. If Label does not remove all such
Deleted Recordings within such thirty (30) day period, Navarre
shall have the right to scrap, destroy or dispose of the Deleted
Recordings, without any further obligation to Label, and charge
Label for its costs incurred in the scrapping, destruction or
disposal of such products. Navarre shall, at its option, either
(i) charge Label's account hereunder an amount equal to such costs
or (ii) deduct such costs from the Return Reserve Account or (iii)
xxxx Label for such costs, in which case Label shall pay such
costs within thirty (30) days.
8.2. Navarre shall not be required to recall Label's Deleted Recordings
from its customers more than twice during any calendar year of the
Term. Navarre shall send a recall notice to its customers on or
about July 1 and February 1 of each calendar year during the Term
(the "Notice Date"). The recall notice sent on or about July 1
will reference all Recordings deleted from Label's Catalog during
the six (6) month period immediately preceding the Notice Date.
The recall notice sent on or about February 1 will reference all
Recordings deleted from Label's Catalog during the six (6) month
period immediately proceeding said Notice Date.
8.3. Notwithstanding Sections 8.1 and 8.2 above, Label agrees and
acknowledges that upon Navarre's receipt of prior written notice
of the deletion of a particular Recording, Navarre shall be
entitled to immediately notify its customers that such Recording
is scheduled to be deleted. Navarre shall also be entitled to
determine
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and notify its customers of the date after which Navarre shall no
longer distribute such Recording or accept returns of such
Recording.
9. SALES BY NAVARRE.
9.1. Navarre is authorized to sell the Consigned Product to any of its
accounts in the Territory.
9.2. Navarre shall be free to establish, at its own discretion, the
costs, prices and terms of sale with respect to its agents and
distributors.
10. ADVERTISING AND MARKETING.
10.1. Label agrees to support, market and promote the sale of Recordings
at its own expense. Label's efforts shall include, but shall not
be limited to, advertisements in trade and consumer publications,
participation in in-store or media promotions, and the development
of promotions specifically aimed at facilitating radio air-play of
the Recordings.
10.2. Navarre agrees to use its best efforts to assist Label in
marketing and promoting the Recordings, but in no event shall
Navarre be deemed to bear financial responsibility for conducting
such marketing and promotional activities.
10.3. Label shall provide suitable advertising allowances that may be
used by Navarre or its customers.
10.4. Label shall provide to Navarre, free of charge, camera-ready art
work and all other materials needed for use in advertisements and
other promotional materials.
10.5. Navarre and its customers may produce their own advertisements or
promotional materials for the Recordings; provided, however, that
the general concept of such advertisements and promotional
material, or the general use thereof, must be approved in advance
by Label. Such approval shall not be unreasonably withheld, and
Label's decision to grant or deny such approval shall be made
within five (5) working days of its receipt of Navarre's written
request for such approval. In the event that Label fails to
respond within five (5) working days, such approval shall be
deemed to have been granted by Label.
11. INTELLECTUAL PROPERTY.
11.1. Label grants to Navarre, for the Term of this Agreement, a
transferable license to use the trademarks, trade names and any
other intellectual property relating to the Recordings in
connection with the distribution and sale of the Recordings in the
Territory. Navarre shall have no right to remove or cover such
marks or names on the Recordings or related packaging. Except for
the rights granted to Navarre in
- 13 -
this Agreement, the trademarks, trade names and any other
intellectual property relating to the Recordings shall remain the
exclusive property of Label.
11.2. Label warrants that the Recordings, and the sale, distribution and
intended use thereof, do not infringe any patent, copyright,
trademark, trade name or other intellectual property right of any
third party. Label shall provide Navarre with copies of any and
all agreements between Label and any Artists or other Publishers
which relate to licensing of the Recordings or any intellectual
property rights related thereto.
11.3. Label shall indemnify, defend and hold harmless Navarre, its
affiliates, and their officers, directors, agents, employees,
successors and assigns from and against any and all claims,
losses, damages, expenses, obligations, penalties, demands, suits,
proceedings, judgments, costs and liabilities (including, without
limitation, costs of collection, employee time in depositions and
document review, reasonable attorney's fees and other costs of the
defense) incurred by them relating to or arising from any claims
relating to licensing of the Recording, payment of royalties or
fees, or of infringement of patent, copyright, trademark, trade
name or other intellectual property right by any third party. In
the event such a claim is made, Navarre may, at its option,
immediately cease the sale and DISTRIBUTION (AND MANUFACTURE AND
PRINTING, IF APPLICABLE) OF THE RECORDINGS.
11.4. In the event a Recording, or the sale, distribution or intended
use thereof, is found to infringe upon the patent, copyright,
trademark, trade name or other intellectual property right of a
third party, Label may, at its option and its expense, procure the
rights necessary for Navarre to continue the sale and distribution
(and manufacture and printing, if applicable) of the Recordings
under this Agreement, or modify or replace the infringing part of
the Recordings so that Navarre may continue the sale and
distribution (and manufacture and printing, if applicable) of
Recordings. Should Label be unable or unwilling to replace or
modify the infringing part of a Recording, or procure the right to
the continued use thereof, within thirty (30) days of Label being
notified of an infringement claim, Navarre may, at its option,
return all Recordings held as Consigned Product or returned to
Navarre by its customers for a full cash refund of amounts paid by
Navarre to Label for such Recordings.
11.5. Navarre agrees to respect and abide by the terms and conditions of
any license to use patents, copyrights, trademarks, trade names or
other intellectual property for purposes of this Agreement.
Navarre will indemnify and hold Label harmless against claims by
third parties arising from a breach by Navarre of the terms and
conditions of any such license.
- 14 -
12. REPRESENTATIONS AND WARRANTIES OF LABEL.
12.1. As an inducement for Navarre to enter into this Agreement, Label
hereby warrants and represents to Navarre as follows:
12.1.1. EXISTENCE. POWER AND AUTHORITY. Label is a corporation
duly organized and validly existing in the State of
Delaware, and is fully qualified to do business and in
good standing in the State of Delaware, and in every
other jurisdiction where the nature of its businesses or
the character of its properties makes such qualification
necessary, and has all requisite power and authority to
carry on its businesses as now conducted and as
presently proposed to be conducted. Label's legal name
is Bodyguard Xxxxxxx.xxx, Inc. and it conducts business
only under that name except as disclosed on Schedule
1.2. Label has full power and authority to execute and
deliver this Agreement and the Documents. The Documents
each constitute the legal, valid and binding obligations
of Label enforceable in accordance with their respective
terms.
12.1.2. LICENSES; ROYALTIES AND INFRINGEMENT. Label possesses
adequate licenses, permits, franchises, patents,
copyrights, trademarks and trade names, or rights
thereto, to conduct its respective business
substantially as now conducted and as presently proposed
to be conducted. There does not exist, and there is no
reason to anticipate that there may exist, any liability
to Label with respect to any claim of infringement
regarding any patent, copyright, trademark, trade name
or other intellectual property right relating to the
Releases. Label is current on all license and royalty
payments owed, including, without limitation, Artist and
mechanical royalties.
12.1.3. DEFAULT. Label is not in default of a material provision
under any material agreement, instrument, decree or
order to which it is a party or by which it or its
respective property is bound or affected.
12.1.4. CONSENTS. No consent, approval, order or authorization
of any governmental authority or any third party is
required in connection with the execution and delivery
of this Agreement, or any of the agreements or
instruments herein mentioned including, without
limitation, the Documents, or the carrying out or
performance of any of the transactions required or
contemplated hereby or thereby or, if required, such
consent, approval, order or authorization has been
obtained by Label prior to the date hereof.
12.1.5. OWNERSHIP AND MANAGEMENT. With the exception of
affiliations listed on Schedule 1.2 and except as
described on the list of owners, directors/governors and
officers/managers required by Section 19.2 below,
- 15 -
none of the persons so listed owns, controls or is
employed by or affiliated with any recording company or
label other than Label.
13. REPRESENTATIONS AND WARRANTIES OF NAVARRE. Navarre is a Minnesota
corporation duly organized and validly existing in the State of
Minnesota, and is fully qualified to do business and in good standing in
the State of Minnesota, and in every other jurisdiction wherein the
nature of its businesses or the character of its properties makes such
qualification necessary, and has all requisite power and authority to
carry on its businesses as now conducted and as presently proposed to be
conducted. Navarre's legal name is "Navarre Corporation" and it conducts
business only under that name. Navarre has full power and authority to
execute and deliver this Agreement and the Documents. The Documents each
constitute the legal, valid and binding obligations of Navarre
enforceable in accordance with their respective terms.
14. DEFAULT; TERMINATION; REMEDIES.
14.1. LABEL'S RIGHT TO TERMINATE WITHOUT CAUSE; TERMINATION PREMIUM.
Label may terminate this Agreement without cause only if it has
been in effect for a period of at least one calendar year. Label
must give Navarre at least 180 days advance written notice of
such termination. Upon such notice, Navarre shall not be
required to make further payments to Label for a period of 180
days after the date the termination is effective. Upon
termination by Label without cause, Label shall pay to Navarre,
as liquidated damages for the loss of the rights granted under
this Agreement and not as a penalty, a dollar amount derived
from the gross margins that would have been realized by Navarre
during the remaining Term of this Agreement. For this
calculation, the "gross margin percentages" realized by Navarre
from the shipment and sale of recordings over the six (6) month
period preceding the delivery of notice will be used to
determine the average gross margin dollars realized per month.
This dollar amount shall then be multiplied by the number of
months remaining in the Term. Navarre's invoice for this amount
shall include documentation to support its calculation. Payment
to Navarre shall be made within thirty (30) days of Label's
receipt of such invoice. Label shall have the right to audit
Navarre's books and records to confirm the accuracy of Navarre's
calculation of its basis for this payment, provided that Label
shall place the amount of such payment in an escrow account
pending verification of the amount by the audit. As used herein,
"gross margin percentage" shall be defined as the sell price
Navarre charges its customers minus the Base Price Navarre pays
Label (as defined in Schedule A) divided by the sell price
Navarre charges its customers.
14.2. NAVARRE'S RIGHT TO TERMINATE WITHOUT CAUSE. Navarre may
terminate this Agreement without cause by giving Label ninety
(90) days notice of its intent to terminate. The Parties agree
to as smooth a transition as possible.
- 16 -
14.3. TERMINATION FOR CAUSE. This Agreement may be terminated for
cause by either Party upon the material breach by Label or
Navarre of any obligation created hereunder. Except as otherwise
provided in this Agreement, such termination shall be effected
by either Party giving thirty (30) days advance written notice
of its intent to terminate. The notice must give details of the
claimed breach, and the Party given the notice shall have thirty
(30) days in which to cure such breach before the termination
will be effective.
14.4. IMMEDIATE TERMINATION. In the event either Navarre or Label
files or becomes subject to a petition in bankruptcy or other
assignment for the benefit of creditors, such event shall
constitute a material breach and may be cause for immediate
termination of this Agreement unless such bankruptcy petition is
discharged within thirty (30) days. In such event, all Consigned
Product held by Navarre shall be delivered to Label, or held for
Label's benefit at a location designated by Label.
14.5. DELIVERY MINIMUM. If the Delivery Minimum set forth in Section
3.1 of this Agreement with respect to any Contract Year is not
timely fulfilled, then Navarre shall have the further right, in
its sole discretion and without limitation of any of its other
rights, to suspend its obligations hereunder until such Delivery
Minimum is fulfilled. If SUCH FAILURE CONTINUES FOR A PERIOD OF
THIRTY (30) days or more, Navarre shall have the further right,
in its sole discretion without limitation of any of its other
rights, to terminate the Agreement effective immediately upon
written notice to Label.
14.6. DEBIT BALANCE. If at any time, for any reason, Label has a debit
balance with Navarre, Label shall pay to Navarre the debit
balance within thirty (30) days of Navarre's demand for payment.
If all or any portion of the balance remains unpaid after thirty
(30) days, Navarre shall be entitled, at its option, to exercise
any of the remedies set forth in Section 14.8. Navarre
acknowledges and agrees that if it exercises its rights under
this Section 14.6, before using the Masters to manufacture
additional Recordings it will first liquidate substantially all
of its existing Consigned Product inventory. Further, in the
event it does manufacture and distribute additional Recordings
to recoup amounts due by Label to Navarre, then in such
instances Navarre will be responsible for paying (or setting
aside funds as necessary to pay) all mechanical, musical,
composition and other royalties that would be due to the Artists
and other Publishers of such Recordings.
14.7. NOTICE TO NAVARRE'S CUSTOMERS. Label agrees and acknowledges
that upon Navarre's receipt of written notice of termination
from Label pursuant to either Section 14.1 or 14.3 or 14.6 , or
in the event either Party becomes subject to a petition in
bankruptcy pursuant to Section 14.4, Navarre shall be entitled
to immediately notify its customers that the Agreement is
scheduled to be terminated. Navarre shall also be entitled to
indicate the date after which Navarre shall no longer distribute
the Recordings or accept returns of Sold Goods. Label
- 17 -
further agrees and acknowledges that Navarre may, at its option,
indicate to its customers the name and address of Label's new
distributor, if any, who shall accept returns of Sold Goods
after the date on which Label no longer accepts such returns.
14.8. REMEDIES. At any time Label is in default hereunder beyond any
applicable cure period, Navarre shall be entitled, at its
option, to exercise any or all of the remedies set forth below:
(i) withhold future payments due Label until such debit
balance is paid, and/or
(ii) liquidate any inventory of Label in the possession
or control of Navarre at prices determined by Navarre,
in its discretion, in quantities sufficient to fully
repay any amounts owed by Label to Navarre and/or
(iii) apply any proceeds received from such liquidation
towards Label's debit balance and/or
(iv) manufacture and sell additional Recordings at
prices determined by Navarre, in its discretion, in
quantities sufficient to fully repay all amounts owed by
Label to Navarre and/or
(v) immediately terminate this Agreement.
14.9. PAYMENT AND RETURNS UPON TERMINATION. At the end of the Term, or
upon earlier termination of this Agreement for any reason,
Navarre shall accept Sold Product returns for 180 days and debit
the Return Reserve Account for such Returned Goods. Any such
Returned Goods shall be held by Navarre as security for payment
of any sums due Navarre by Label under this Agreement or the
Documents. At the end of the 180 day period, Navarre shall have
the option to return all Returned Goods to Label for credit, or
if there is a balance owed to Navarre, Navarre shall first
deduct amounts owed from the Return Reserve Account, and then
for any amounts still remaining due, Label shall pay Navarre
within thirty (30) days. After all amounts due Navarre by Label
are paid, any sum remaining in the Return Reserve Account shall
be paid to Label and any Returned Goods or Consigned Product
shall be returned to Label or to any designated party directed
by Label.
14.10. SURVIVAL. Notwithstanding anything to the contrary in this
Agreement, so long as Label has a debit balance due to Navarre,
Navarre's rights to distribute, manufacture and sell Label's
Recordings and all related licensing rights granted herein to
Navarre shall continue in perpetuity until such time that all
amounts owing to Navarre from Label are paid in full.
- 18 -
15. SECURITY INTEREST. Label hereby irrevocably assigns and transfers to
Navarre as collateral security for payment of all amounts which Navarre
is entitled to charge against Label pursuant to this Agreement and the
other Documents, or which Label may otherwise owe Navarre, all of
Label's right, title and interest in and to all inventory, goods and
merchandise owned by Label which are now or at any time hereafter in the
possession of Navarre or which are located on any premises owned or
leased by Navarre, whether on consignment or otherwise, and all
recordings, records, tapes, CD's, CD ROM's, DVD's, videos or similar
products delivered to Navarre in connection with this Agreement; and all
Masters delivered to Navarre for all Releases financed or distributed by
Navarre, and all manufacturing, distribution and licensing rights and
copyrights related thereto, and all other license and contract rights
now existing or hereafter at any time arising, relating to the
above-referenced collateral, including, without limitation, the right to
use and exploit the Masters consistent with this Agreement until
repayment in full of any and all amounts owed by Label to Navarre,
together with all substitutions and replacements for and products and
proceeds of any of the foregoing property (the "Collateral"). Upon
Label's payment of all amounts due Navarre hereunder, Navarre shall
terminate its security interest in and to the Collateral and shall
execute any and all documents necessary to effectuate such termination.
Label warrants and represents that it has not granted and will not grant
any rights that would be superior to Navarre's rights hereunder in the
Collateral to any other party by way of assignment, security interest or
otherwise, and that any GRANT OF RIGHTS with respect to the Collateral
will be subject to Navarre's rights. Label hereby irrevocably grants to
Navarre a limited power-of-attorney to execute any and all financing
statements or other documents (including, without limitation, UCC-1
forms) which Navarre deems, in its sole discretion, necessary to protect
its interests in such Collateral and Navarre shall have the right to
file such statements, in Label's and/or Navarre's name, in any
jurisdictions) where Navarre deems appropriate.
16. RELATIONSHIP OF THE PARTIES. Neither Party is the employee, agent or
legal representative of the other for any purpose whatsoever.
17. NOTICES. All notices from one Party to the other hereunder, unless
herein indicated to the contrary, shall be in writing and shall be
served by mailing a copy thereof, postage prepaid, certified or
registered mail, return receipt requested, address as specified below or
such other address as may be substituted by written notice from either
party to the other:
To Label: To Navarre:
To the address set forth on Navarre Corporation
Page 1 of this Agreement 0000 00" Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
- 19 -
Notices shall be deemed complete when said notice is deposited in any United
States mailbox and the date of such mailing shall constitute the date of
notice. The electronic mail addresses and facsimile numbers set forth above,
if any, are listed for convenience purposes only, and no communications made
through such mediums shall constitute notice pursuant to this Section 17.
18. GENERAL PROVISIONS.
18.1 REFERENCES. All references made in this Agreement to Sections,
Schedules, Exhibits and Addenda shall be deemed to mean the
corresponding Sections, Schedules, Exhibits and Addenda of this
Agreement. All attached Schedules, Exhibits and Addenda are
incorporated into this Agreement and made a part hereof, and any
reference to the Agreement shall be deemed to include all such
Schedules. Exhibits and Addenda.
18.2 GOVERNING LAW; ARBITRATION. This Agreement shall be governed by
the laws of the State of Minnesota, without regard to any
conflict of law provisions that may otherwise apply. Any
controversy or claim arising out of or relating to the
Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association
under its Commercial Arbitration Rules, and judgment on the
award rendered by the arbitrators) may be entered in any court
having jurisdiction thereof. The Parties hereby designate
Hennepin County, Minnesota, as the locale for such arbitration.
18.3 ATTORNEYS' FEES; COSTS. Label shall reimburse Navarre for any
legal fees or other costs, including but not limited to
reasonable attorneys' fees, costs of collection, and employee
time in depositions and document review, incurred in connection
with the arbitration of any controversy or claim arising out of
or relating to the Agreement, or the breach thereof, or in the
event Label files a petition in bankruptcy or for reorganization
or shall be adjudicated a bankrupt or insolvent.
18.4 ASSIGNMENT. This Agreement may not be assigned by either Party
without the written consent of both Parties, which shall not be
unreasonably withheld. Said assignment shall not unreasonably
impair the rights of the non-assigning Party and shall not be on
terms less favorable than the terms set forth in this Agreement.
Notwithstanding the foregoing, Navarre, by giving written notice
to Label, may make any assignment to a subsidiary, other
affiliated company or any company purchasing substantially all
of its assets.
18.5 THIRD PARTY BENEFICIARIES. No parties, other than Navarre and
Label, are intended to be a third party beneficiary of this
Agreement.
18.6 ENTIRE AGREEMENT. This Agreement and all Schedules, Exhibits and
Addenda attached hereto supersede all prior oral or written
proposals and communications between the parties related to this
Agreement, and shall not be modified, rescinded, waived or
otherwise changed except pursuant to the written consent
- 20 -
signed by a duly authorized corporate officer of each Party.
This Agreement and the Schedules,. Exhibits and Addenda attached
hereto set forth the entire agreement between the Parties with
respect to the subject matter hereof. Both Parties agree that to
the extent there are any terms contained in any invoices or
purchase orders issued pursuant to the terms of this Agreement
that vary with the terms of this Agreement, then the terms set
forth in this Agreement shall govern unless such purchase order
or invoice containing the contrary terms is signed by an officer
of the Party against whom enforcement is sought.
18.7. NO INDUCEMENT. Each Party confirms that no inducements, promises
or representations other than those set forth herein have caused
it to enter into this Agreement.
18.8. WAIVER. No waiver of any provision or default under this
Agreement shall affect the right of Label or Navarre to enforce
such provision or to exercise any right or remedy in the event
of any other default, whether or not similar, at a later time.
18.9. HEADINGS. The captions preceding the text of the various
provisions of this Agreement are inserted solely for reference
and shall not constitute a part of this Agreement nor affect its
meaning, construction or effect. Every word or phrase defined
herein shall, unless HEREIN SPECIFIED TO THE CONTRARY, have the
same meaning throughout this Agreement. As used herein, whenever
applicable, the singular shall include the plural and the plural
shall include the singular, the masculine shall include the
feminine and the feminine shall include the masculine.
18.10. RELIANCE. Navarre shall have no obligation whatsoever to make
any investigation of the facts relevant to any warranty or
representation made by Label herein. Neither the furnishing by
Label nor the receipt by Navarre of any document shall impair
Navarre's absolute rights to rely, to have relied, and to
continue to rely on any warranties or representations made by
Label in this Agreement or the Schedules, Exhibits and Addenda
attached hereto in connection with such document or the contents
thereof.
18.11. FORCE MAJEURE. In the event of any act of God or force majeure,
such as strikes, lockouts, accidents, fires, delays in
manufacturing, delays in delivery of materials, labor
controversy, government actions, war or any other causes beyond
their control, neither Party shall be responsible for delay in
performance hereunder nor shall incur liability to the other due
to the resulting inability to perform provided that the Party
relying on such events of force majeure gives notice to the
other Party of the cause and anticipated duration within thirty
(30) days of the occurrence of such event. In the event the
conditions continue for a period in excess of six (6) months,
then either Party may terminate this Agreement.
18.12. VALIDITY. If any part of this Agreement shall be determined to
be invalid or unenforceable by a court of competent jurisdiction
or by any other legal
- 21 -
constituted body having the jurisdiction to make such
determination, the remainder of this Agreement shall remain in
full force and effect provided the part of this Agreement thus
invalidated or declared unenforceable is not essential to the
intended operation of this Agreement.
18.13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts which, when taken together, shall constitute one
and the same instrument.
19. PRECONDITIONS TO NAVARRE'S SIGNATURE. Prior to Navarre's execution of
this Agreement, Label shall have provided to Navarre all of the
following, in form and substance satisfactory to Navarre:
19.1 Incumbency Certificate setting forth (i) a certified copy
of Label's Articles of Incorporation/Organization, together
with all amendments thereto; (ii) a copy of Label's
By-Laws/Operating Agreement, together with all amendments
thereto; (iii) a Certificate of Good Standing issued by the
Secretary of State of Label's state of organization and any
states in which it has a significant business office; (iv)
Label's existing officers/managers; (v) Label's chief executive
office and principal place of business; and (vi) a copy of the
resolutions of Label's Board of Directors/Governors authorizing
and approving this Agreement.
19.2. List of Label's current, owners-directors/governors and
officers/managers.
19.3. Such other documents, information and actions as Navarre may
reasonably request.
The Parties, by the actions of their authorized representatives, have executed
this Agreement, including the attached Schedules, Exhibits and Addenda, as of
the date first noted above.
BODYGUARD XXXXXXX.XXX, INC. NAVARRE CORPORATION
Signature: /s/ Xxxx Xxxxx Signature: /s/ Xxxxx X. Xxxxxx
-------------------- ---------------------
Typed/Printed Name: Xxxx Xxxxx Typed/Printed Name: Xxxxx X. Xxxxxx
--------------- -------------------
Title: President Title: VP/GM Independent Music
------------- ------------------------------
- 22 -
REVIEWED AND COMPLETED
(OR INTENTIONALLY LEFT BLANK)
By: __________________ [INITIALS]
ON BEHALF OF BODYGUARD
XXXXXXX.XXX. Inc.
DATE: ____________________, 2001
SCHEDULE A
TO DISTRIBUTION AGREEMENT OF
JANUARY 18, 2001
BETWEEN
BODYGUARD XXXXXXX.XXX, INC.
AND
NAVARRE CORPORATION
BASE PRICES
Current Base Prices:
Suggested Base Price Charged Suggested Base Price Charged
Retail Price To Navarre(1) Retail Price to Navarre(1)
2.99 .96 16.98 8.16
3.49 1.34 17.98 8.44
3.99 1.50 18.98 8.97
4.98 1.92 19.98 9.40
5.98 2.20 23.98 11.04
6.98 2.88 24.98 11.37
7.98 3.45 25.98 11.71
8.98 3.93 27.98 12.86
9.98 4.51 29.98 13.82
10.98 4.89 30.98 14.25
11.98 5.85 31.98 14.73
12.98 6.28 32.98 15.16
13.98 6.81 33.98 15.64
14.98 7.20 39.98 18.43
15.98 7.72
(1) The Base Prices set forth above have not been adjusted for any discounts
described in this Agreement Growth
GROWTH INCENTIVE REBATE
Navarre's Annual Net Sales
(in U.S. Dollars) Growth
To Label for Recordings Incentive Rebate/Percentage
----------------------- ---------------------------
0 - $2,000,000 0
$2,000,001 - $4,000,000 2%
$4,000,001 - $8,000,000 4%
$8,000,001 - $12,000,000 5%
$12,000,001 - $15,000,000 6%
$15,000,001 and over 7%
-23-
REVIEWED AND COMPLETED
(OR INTENTIONALLY LEFT BLANK)
By: __________________ [INITIALS]
ON BEHALF OF BODYGUARD
XXXXXXX.XXX. Inc.
DATE: ____________________, 2001
SCHEDULE A-2
TO DISTRIBUTION AGREEMENT OF
JANUARY 18, 2001
BETWEEN
BODYGUARD XXXXXXX.XXX, INC.
AND
NAVARRE CORPORATION
CANADIAN BASE PRICES
Current Canadian Base Prices (in Canadian Dollars):
Suggested Base Price
Retail $ to Navarre
-------- ----------
CD Maxi 6.98 3.76
CD Budget 8.98 4.35
CD Low Mid Price 13.98 6.75
CD Mid Price 15.98 7.65
CD High Mid Price 18.98 8.47
CD Full Price 20.98 10.25
CD Double 32.98 15.15
CD High Double 39.98 19.00
CD Box Set 44.98 22.25
CS Full Cassette 12.98 6.15
Video Reg VHS 21.98 9.30
Video High VHS 24.98 12.30
DVD Music 31.98 15.50
-24-
REVIEWED AND COMPLETED
(OR INTENTIONALLY LEFT BLANK)
By: __________________ [INITIALS]
ON BEHALF OF BODYGUARD
XXXXXXX.XXX. Inc.
DATE: ____________________, 2001
SCHEDULE B
TO DISTRIBUTION AGREEMENT OF
JANUARY 18, 2001
BETWEEN
BODYGUARD XXXXXXX.XXX, INC.
AND
NAVARRE CORPORATION
LABEL'S CATALOG OF RECORDINGS UPC CODES
----------------------------- ---------
-25-
BODYGUARD XXXXXXX.XXX, INC.
BARCODES
Naked Underneath- 8 02912 - 0001 - 2 9
Bay City Rollers 8 02912 - 0002 - 2 8
Live at The Budokan 8 02912 - 0003 - 2 7
Summer Snowmen- 8 02912 - 0004 - 2 6
DeCambre- 8 02912 - 0000 - 0 0
Xxxx Xxxxxxx- 0 00000 - 0006 - 2 4
Xxxxxx Hero- 8 02912 - 0007 - 2 3
Quiet Riot- 8 02912 - 0008 - 2 2
Love Saves The Day- 8 02912 - 0009 - 2 1
June-
REVIEWED AND COMPLETED
(OR INTENTIONALLY LEFT BLANK)
By: __________________ [INITIALS]
ON BEHALF OF BODYGUARD
XXXXXXX.XXX. Inc.
DATE: ____________________, 2001
SCHEDULE 1.2
TO DISTRIBUTION AGREEMENT OF
JANUARY 18, 2001
BETWEEN
BODYGUARD XXXXXXX.XXX, INC.
AND
NAVARRE CORPORATION
CURRENT "D/B/A'S" AND BUSINESS NAMES OF LABEL
-26-
REVIEWED AND COMPLETED
(OR INTENTIONALLY LEFT BLANK)
By: __________________ [INITIALS]
ON BEHALF OF BODYGUARD
XXXXXXX.XXX. Inc.
DATE: ____________________, 2001
SCHEDULE 11.1.1
TO DISTRIBUTION AGREEMENT OF
JANUARY 18, 2001
BETWEEN
BODYGUARD XXXXXXX.XXX, INC.
AND
NAVARRE CORPORATION
TRADEMARKS AND TRADE NAMES
-27-
ADDENDUM I
TO DISTRIBUTION AGREEMENT OF
JANUARY 18, 2001
BETWEEN
BODYGUARD XXXXXXX.XXX, INC.
AND
NAVARRE CORPORATION
DIGITAL PERFORMANCE PHONORECORD DELIVERY RIGHTS.
-----------------------------------------------
1. GRANT OF RIGHTS. Pursuant to this Addendum I, Label hereby grants, licenses,
transfers and assigns to Navarre on a non-exclusive basis:
1.1. All digital performance rights owned or controlled by Label,
including (but not limited to) all rights of the copyright
proprietors of the Masters under the Digital Performance Rights
in Sound Recordings Act of 1995, the Digital Millennium
Copyright Act, and any and all future pertinent legislation,
insofar as such rights pertain to the digital performance of
Masters ("Digital Performance Rights"). If Label is associated
with a Publisher that owns or controls the Compositions embodied
in such Masters, then Label further grants to Navarre (or will
cause Publisher to grant to Navarre) a royalty-free license to
perform the Compositions by means of broadcast over the internet
in conjunction with Navarre's exercise of the Digital
Performance Rights granted by Label.
1.2. All digital phonorecord delivery rights owned or controlled by
Label, including (but not limited to) all rights of the
copyright proprietors of Masters under the Digital Performance
Rights in Sound Recordings Act of 1995, the Digital Millennium
Copyright Act, and any and all future pertinent legislation,
insofar as such rights pertain to digital phonorecord delivery
of Masters ("Digital Phonorecord Delivery Rights").
1.3. The right to use the name, image and likeness of all performing
Artists who recorded the Masters, in connection with Navarre's
commercial exploitation of digital performance rights and
digital phonorecord delivery rights; together with all key art
embodying such Artist's name, image or likeness that is owned or
controlled by Label and any promotional videos.
2. TERRITORY. The rights granted to Navarre by Label under this Addendum shall
apply anywhere in the world and shall not be limited to the Territory as defined
elsewhere in the Agreement.
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3. PAYMENTS BY NAVARRE TO LABEL.
3.1 In consideration of Label's grant of rights to Navarre as set
forth in this Addendum, Navarre shall pay or credit Label $0.50
for each occasion that a Title from a Recording is digitally
delivered by Navarre to a consumer over the internet, except for
deliveries made pursuant to Section 3.2 and 3.3 of this Addendum
I.
3.2. Navarre is authorized to use Digital Performance Rights for no
consideration in all cases where Navarre employs a streaming
technology or other form of encryption scheme that minimizes the
likelihood that a Master will be downloaded for permanent usage
by consumers without payment to Navarre.
3.3 No payment shall be due from Navarre to Label on account of any
digital distribution of on a free or no-charge basis for
promotion, review or advertisement purposes, or as a sales or
marketing inducement. For these purposes, Navarre may express
any discounts to the price it otherwise would charge to a
consumer as free goods.
3.4. Navarre shall have sole discretion to sell, price, distribute,
advertise, license, market and promote all rights licensed
hereunder, and may use facilities it owns or controls in
connection therewith. The amount payable to Label as set forth
herein is based ON NAVARRE'S CURRENT PRICING ASSUMPTIONS AND
POLICIES, which Navarre may change from time to time during the
Term. Navarre shall give thirty (30) days prior written notice
of any such modification to Label.
3.5. Navarre shall account to and pay Label as set forth in Section 4
of the Agreement. Digital Performance Rights and Digital
Phonorecord Delivery Rights, and all sums payable by Navarre to
Label on account of Navarre's commercial exploitation of such
rights, shall comprise a single, integrated,
cross-collateralized accounting unit with all sums due or
payable to Navarre on account of Navarre's distribution of
Recordings under this Agreement.
4. COSTS.
4.1. Navarre shall be responsible to pay all costs in connection with
the digital delivery process, including (but not limited to)
storage of the digital data comprising each Master; the
advertising, marketing and administration of Navarre's website
and that of its agents and affiliates; the acquisition and
maintenance of computer and telecommunications equipment and
facilities; and credit and collections. For each digital
delivery, Navarre shall pay any mechanical copyright royalty due
to the Artists of the applicable Composition. For this purpose,
Label grants and assigns to Navarre the benefit of any
"controlled composition" or reduced mechanical royalty rate
clause set forth in Label's agreement with the Artists of the
applicable Master. If Label is affiliated with a Publisher that
owns or controls the applicable Composition, then Label grants
to Navarre (or will cause Publisher to grant to Navarre) a
mechanical
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license to duplicate such Composition at a rate that is
three-fourths (3/4) of the statutory copyright royalty rate in
effect as of the date of the digital delivery.
4.2 Label shall pay all costs in connection with the origination and
production of Masters, including (but not limited to) all
royalties payable to Artists, Publishers, and other persons
rendering services in connection therewith; and all master use
royalties or other royalties payable to any licensor of sound
recordings. Label shall pay any per-unit royalties due to the
American Federation of Musicians, the American Federation of
Television and Radio Artists, or any other applicable union or
guild.
5. OTHER PROVISIONS.
5.1 Except as set forth in the Agreement and the Addenda attached
and made a part thereof, all rights in and to the Masters are
reserved by Label.
5.2. Navarre may sub-license or assign all rights granted herein,
which similarly may be sub-licensed or assigned by any such
licensee.
Label shall supply Navarre with all production elements required by
Navarre, including (but not limited to) digital master tapes or
discs, key art, and label copy (to include the full name, address and
performing rights society affiliation of all applicable Publishers),
at Label's sole costs and expense. Label also shall supply Navarre
with original analog production elements, if necessary. Label
authorizes and directs Navarre to utilize the commercial CD version
of Recordings embodying the Masters in connection with Navarre's
commercial exploitation of rights hereunder, together with the key
art appearing on the insert card and booklet packaged with such CD's.
6. TERM AND TERMINATION OF ADDENDUM. The terms and conditions of this Addendum
shall be in effect throughout the Term of the Agreement.
7. CAPITALIZED TERMS. All capitalized terms in this Addendum I shall have the
meanings given to them in the Agreement.
8. TERMS AND CONDITIONS OF AGREEMENT TO APPLY. Except where the context
indicates otherwise, the terms and conditions and the representations and
warranties contained in the Agreement shall apply to this Addendum I; provided,
however, that where the terms of this Addendum I and the Agreement conflict, the
terms of this Addendum I shall govern.
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