Partnership and Procedures
1. Grant of Rights
("Company") grants to NextXtar Music ("NextXtar") the following rights throughout the world (“Territory”) and during the Term (as such term is defined below):
(a) Exclusive Licensing and Distribution Rights. NextXtar Music shall have the exclusive right to sell, copy, distribute, perform, sublicense and otherwise exploit the Recordings (as such term is defined below) in whole or in part direct to consumers or to retailers, service providers and other users of any description (the "Licensees") that sell, copy, distribute, transmit, perform or otherwise exploit sound and/or audiovisual recordings by any and all means and media (whether now known or existing in the future). Notwithstanding the foregoing, NextXtar Music shall have no right to distribute the Recordings via physical distribution of pre-manufactured vinyl records, cassettes, CDs or DVDs through normal retail channels.
(b) Sound Recording Copyright Owner Representative. NextXtar Music shall have the exclusive right to collect all income deriving from the Recordings as Company's authorized sound recording copyright owner representative, i.e. income and or levies deriving from digital, reproduction and performance uses, under statute, industry agreement or otherwise from sound recording collection bodies, if not already collected by Company or Company's agent as of the execution date hereof (provided, only if Company gives NextXtar Music written notice of any such prior collection arrangements promptly following execution hereof).
(c) Synchronization. NextXtar Music shall have the non-exclusive right to license reproduction of the Recordings in synchronization with visual images in connection with audiovisual works (subject to Company's prior approval of each synch license, which approval shall not be unreasonably withheld), except that once NextXtar Music introduces a synchronization placement opportunity in writing to Company, then such opportunity (along with any options or ancillary uses, e.g. film as well as its trailers, TV show as well as its commercials, and vice versa) shall become exclusive to Orchard.
(d) Artwork; Name & Likeness. NextXtar Music and the Licensees shall have the right to use album artwork and artists' names, likenesses and biographical material in connection with (i) exploitation of the Recordings and the promotion thereof, and (ii) its exclusive right to license, on a stand-alone basis, including, without limitation, for use as "wallpaper" on mobile handsets, caller tunes, mobile radio, movies soundtrack and other devices.
(e) Causes of Action. NextXtar Music shall have the exclusive right to initiate, collect, and settle on causes of action on Company’s behalf with respect to all rights granted hereunder, whether accrued or accruing. Orchard’s legal fees associated with such causes of action shall be deducted from gross receipts prior to the calculation of fees under paragraph 5(a) below.
The initial term of this agreement (the "Term") shall start on complete execution hereof and end on the last day of the calendar quarter which is five (5) years after the date of complete delivery of the Recordings in accordance with paragraph 3(b) below. Thereafter, the Term shall continue to renew itself for the same time period as the initial term unless one party gives the other notice of termination no later than one hundred eighty (180) days prior to the five (5) year anniversary of the execution date hereof or each subsequent term period, as applicable. If no such notice is provided, then each successive Term shall begin upon the prior’s expiration. Articles 6 through and including Article 11 hereof shall survive the end of the Term.
3. Master Recordings
(a) Master recordings (the "Recordings" herein) shall include all sound recordings and video recordings owned or controlled now or at any time during the Term by Company, record labels affiliated with Company or which are acquired by Company or with whom Company may merge during the Term, as well as all materials uploaded by Company to NextXtar Music website pursuant to paragraph 1(d) above.
4. NextXtar Obligations.
NextXtar Music shall (a) solicit and service the Licensees, (b) secure the encoding of each Recording in format(s) required by the Licensees, (c) process the delivery of the Recordings to the Licensees, and (d) collect amounts due from the Licensees. NextXtar Music does not guaranty placement of the Recordings with any Licensee and NextXtar Music reserves the right to reject distribution of any Recording in its discretion.
NextXtar Music shall pay to Company
(a) Distribution. Fifty percent (50%) of all gross receipts actually received by NextXtar Music from its Licensees deriving from sales of the Recordings to end consumers, and from any monies recovered pursuant to paragraph 1(e) above.
(b) Collections. Fifty percent (50%) of Orchard’s receipts solely with respect to collections described in paragraph 1(b) above.
(c) Synchronization Licenses. Forty percent (40%) with respect to synchronization licenses pursuant to paragraph 1(c) above.
(d) Special Products and Other Promotional Uses. Fifty percent (50%) of gross receipts received by NextXtar Music from Licensees in the form of end-consumer redemptions of the Recordings under programs conducted by other companies to whom NextXtar Music licenses the Recordings to both promote the Recordings and help sell and/or promote such companies’ products or brands, including, for instance, customer acquisition and retention programs, gift-with-purchase and purchase-with-purchase programs, etc.
(e) Compilation Albums. Thirty percent (30%) with respect to compilation album licenses pursuant.
NextXtar Music shall have the right to recoup from amounts payable to Company all encoding expenses incurred by NextXtar Music in connection with all releases. Other expenses shall be recoupable from all amounts payable to Company upon mutual consent (email shall be sufficient for such consent).
(f) NextXtar Music will deduct the money for transferring, uploading and services rendered for all your works.
6. Accountings; Audit.
(a) NextXtar Music shall provide Company with on-line access to Company’s sales and estimated royalty activity hereunder. Payment of any amounts due to Company shall be made by NextXtar Music on a quarter annual basis, forty-five (45) days after quarter end. Any balance due under $50 (aggregated for all Licensees) shall be rolled into the following quarter and paid only when the balance exceeds $50.
(b) Company shall have the right to audit NextXtar Music books and records (which shall be deemed Confidential Information) to verify the accuracy of any particular payment, once with respect to any particular payment, once in each year, at Company's expense, at the place where NextXtar Music maintains such records, during Orchard's normal business hours and on at least thirty (30) days' prior notice. Such audit may only be conducted by an independent certified public accounting firm. Company will have no right to sue NextXtar Music in connection with any royalty accounting statement, or to sue NextXtar Music in connection with any monies received in or otherwise relating to the period such statement covers, unless Company commences the suit within one year after the date the particular statement is rendered and Company hereby irrevocably waives any longer statute of limitations that may be permitted by law.
7. Third Party Obligations
In connection with exploitation of the Recordings contemplated hereunder, Company shall be solely responsible for
(a) all record royalties due to artists, producers, performers and other persons who performed in the making of the Recordings and other royalty participants,
(b) all royalties due to any party as a result of samples included in the Recordings
(c) all payments that may be required under collective bargaining agreements applicable to Company and its affiliates, and
(d) all music publishing licenses and royalties including, without limitation, synchronization and digital mechanical licenses and royalties. Outside of the United States, NextXtar Music customarily requires the Licensees to secure and pay for music publishing licenses (and such license fees may or may not be deducted by the Licensee concerned from the proceeds payable to Orchard). If with respect to any Licensee outside of the United States NextXtar Music is not able to do so, NextXtar Music shall have the right, at its option, without limiting Company’s obligations pursuant to this Article 7.
Responsibility to clear and pay for the music publishing licenses required in connection with such Licensee's sales, which license fees NextXtar Music shall have the right to deduct from royalties payable to Company hereunder.
8. Warranties and Indemnities
(a) Company warrants represents, covenants and agrees that: (i) it has the right and authority to enter into this agreement and to grant to NextXtar Music all rights specified, (ii) all of the Recordings, artwork, metadata, videos and any other materials furnished by Company to NextXtar Music or relating to the Recordings are owned or controlled by Company and shall not infringe on the copyrights or other rights of any person or entity, (iii) NextXtar Music shall have the right to exploit same in all manner hereunder free from adverse claim and without any obligation to make any payment of any nature to any person or entity, other than the amounts due to Company described in Article 5 above, (iv) Company has not, prior to the date hereof, entered into any agreements for the same or similar rights granted to NextXtar Music hereunder, and (v) Company shall comply with all applicable laws, rules and regulations governing its online activities including those concerning so-called “spam” transmissions. Without limitation, Company shall not use the NextXtar Music name, web address, web site or servers or otherwise reference NextXtar Music in any manner.
(b) NextXtar Music warrants and represents that it has the right and authority to enter into this agreement and that the conduct of its distribution activities complies with all applicable laws.
(c) Each party shall defend and indemnify the other party (including its directors, members, officers, employees and other representatives) against any expenses or losses resulting from a third party claim of breach, or a claim which if true would constitute a breach, of any of the party's respective representations, warranties, covenants or agreements contained herein, including reimbursement of reasonable attorneys' fees and litigation expenses. The indemnified party shall give the indemnifying party prompt notice of any claim and, if the indemnified party so requests, the indemnifying party shall defend the indemnified party at the indemnifying party's expense with counsel approved by the indemnified party (which approval shall not be unreasonably withheld or delayed). Any settlement shall be subject to the indemnified party's prior written approval. If a claim is made NextXtar Music shall have the right, in its discretion, to take-down from any or all Licensees the Recording(s) concerned and to withhold payment of royalties hereunder in an amount reasonably related to the claim and potential expenses.
Company agrees that it shall, and it shall instruct in writing its attorneys, accountants and other professional advisors to, hold in confidence and not communicate, transmit, publish, disseminate or otherwise disclose any of the terms and conditions of this agreement or any information regarding Orchard's business learned in the course of dealing or performance hereunder (collectively, “Confidential Information”). Confidential Information shall not include information which (i) at or prior to the time of disclosure was known to or independently developed by Company, except to the extent unlawfully appropriated by Company; (ii) at or after the time of disclosure becomes generally available to the public through no wrongful or negligent act or omission on Company's part; (iii) Company receives from a third party free to make such disclosure without breach of any legal obligation; or (iv) is required to be disclosed pursuant to any statute, regulation, order, subpoena or document discovery request (as to which Company shall give NextXtar Music prompt notice). The fulfillment of Company's obligations under this subparagraph is integral to the success of Orchard's business dealings and NextXtar Music shall be entitled to injunctive relief to enforce the provisions hereof without limitation of its other rights.
10. Governing Law; Exclusive Venue
This agreement shall be governed by European law. The parties hereby grant the courts of Europe exclusive jurisdiction to hear any disputes arising out of or relating to this agreement; no action may be instituted in any other venue
11. Other Important Provisions
(a) The parties shall cooperate in implementing any applicable parental advisory labeling. It is understood that Company shall furnish to NextXtar Music both labeled and "edited" versions of all Recordings.
(b) All notices hereunder shall be given by registered or certified mail, return receipt requested, or by messenger or courier, to the respective addresses below. NextXtar Music may alternatively give notice to the email address specified by Company below. Company must give notice regarding changes to the below address information.