Exclusive Distribution Agreement - KnowSavage Productions Inc. and Open Door Music Inc.
EXCLUSIVE DISTRIBUTION AGREEMENT
This Distribution Agreement ("Agreement") is entered into as of the 1st day of
June, 1999 between KnowSavage Productions, Inc., a New York State corporation
with its principal location at 655 Fulton Street, Brooklyn, NY 11217
(hereinafter referred to as "Artist," "Label" or "Supplier") and Open Door Music
Distribution, a Rhode Island Corporation with its principal place of business at
10 Dorrance Street, Providence, Rhode Island, 02903 (hereinafter referred to as
"Distributor").
WHEREAS The Supplier is in the business of recording, developing, marketing and
supporting certain Products as defined below and the Distributor wishes to
manufacture and distribute to the dealers and the re-marketers of these Products
and assures the Supplier that it has the facilities, personnel, and technical
expertise necessary to do so, The Supplier is willing to grant to the
Distributor, the exclusive right to manufacture and distribute these Products to
such dealers and re-marketers as qualify and as defined below for resale
purposes. In consideration for the mutual promises, covenants, and Agreements
made below, the parties, intending to be legally bound, agree as follows:
1. Definitions
"End-User." Any person or entity who purchases or licenses the Product(s).
"Information." The technical or business information, either oral or
written that the Supplier or the Distributor furnishes to the other marked as
proprietary or confidential or simply treated as such by the disclosing party.
It includes research, development or business activities, including any
unannounced Products and services, as well as any information relating to
services, developments, processes, plans, financial information, customer and
Supplier lists, forecasts and projections. Information will also include the
terms of this Agreement.
"Intellectual Property Rights." Any work of authorship, regardless of
copyrightability, including copyrights and any moral rights recognized by law;
and any other similar rights, in each case on a national and international basis
"Products." The audio, digital or any other technical form, MP3, MP4 or
other soft music downloads now known or later developed, of the musical,
theatrical or literary performances developed or owned by the Supplier that are
specifically listed in Exhibit A attached, along with enhancements, revisions,
remixes or modifications made to the Products by the Supplier.
2. Term. This Agreement will begin on the date first written and will terminate
twenty-four (24) months following the start date, unless sooner or later in
accordance with the terms of this Agreement. Certain sections, as indicated
below, will survive and remain effective even after the termination or
expiration of this Agreement. All other rights and obligations of each party to
the other will terminate upon the termination of this Agreement.
2.1 Advances. Following the full execution of this Agreement and during the
initial twenty-four (24) month term, Distributor shall pay advances for
Supplier's promotional expenses (the "Promotional Fund") of up to twenty-five
($25,000) dollars, which shall be recoupable as Advances. The Promotional Fund
shall be administered exclusively by Distributor. Supplier shall give
Distributor reasonable prior notice of any sums to be disbursed by Distributor
on Supplier's behalf from the Promotional Fund including the payee's full name,
street address, telephone number, contact person and other information
reasonably requested by Distributor (such as, but not limited to, payee's
federal identification number of social security number, copies of the contract
between Supplier and payee, invoices, description of services to be provided,
professional references, etc.).
Upon verification through Soundscan, of sales of at least five thousand (5000)
units of the Product set forth in Exhibit A, Distributor shall pay advances for
Supplier's promotional expenses from the Promotional Fund of up to fifteen
($15,000) dollars, which shall be recoupable as Advances. The Promotional Fund
shall be administered exclusively by Distributor. Supplier shall give
Distributor reasonable prior notice of any sums to be disbursed by Distributor
on Supplier's behalf from the Promotional Fund including the payee's full name,
street address, telephone number, contact person and other information
reasonably requested by Distributor (such as, but not limited to, payee's
federal identification number of social security number, copies of the contract
between Supplier and payee, invoices, description of services to be provided,
professional references, etc.).
3. Exclusive Distributor. The Supplier grants the Distributor an irrevocable
exclusive right and license to manufacture and distribute the Products alone or
with other Products and to affix its own label in addition to the Suppliers on
prior notice and consultation with Supplier. Except as provided, the Distributor
will have sole control over methods of manufacturing, distributing, marketing,
pricing, labeling, advertising, and the terms and conditions of any sale, unless
otherwise provided for herein on prior notice and consultation with supplier.
3.1 Independent Contractors. The Supplier and the Distributor agree that their
relationship is not that of joint venturers, principals or agents, or franchiser
and franchisee. Both are independent contractors acting for their own accounts,
and neither is authorized to make any commitment or representation, express or
implied, on the other's behalf unless authorized to do so by the other in
writing.
3.2 Use of Trademarks and Trade Names. No right, title or interest in or to any
trademarks, trade names, professional names, slogans, labels and designs used by
either the Supplier or the Distributor, nor the goodwill connected, is conveyed
by this Agreement. The Distributor may, in connection with the manufacture,
distribution and sale of the Products pursuant to the terms of this Agreement,
refer to the Supplier's applicable trade names o trademarks provided that all
such references are in conformance with the Supplier's requirements regarding
such use, as such requirements are communicated to the Distributor in writing
from time to time by the Supplier. The Supplier, in connection with the
promotion of the Products, may refer to Distributor's applicable trade names or
trademarks provided that all such references conform to the Distributor's
requirements communicated to Supplier.
4. Distribution Rights. In recognition of the investment to be made by the
Distributor in connection with its manufacture, marketing and distribution of
the Products, the parties agree to the following: The Supplier hereby grants the
Distributor the exclusive right to distribute the Products in all of North
America, including Canada, Mexico and Central America (the "Primary
Territories") in which it is legal to sell the Products, subject to the
limitations below and in Section 4.1.
Notwithstanding anything in the foregoing sentence, the Supplier does hereby
grant Distributor the exclusive right to solicit the distribution, sale or
licensing of the Product in the following territories-Western and Eastern
Europe, Japan, Singapore, Thailand, South America and Australia (the "Secondary
Territories") under the terms set forth in this Agreement for a period of twelve
(12) months from the date first written above.
The Distributor shall distribute the Products to any and all wholesale and
retail outlets, key outlets, direct mail, mail order, audiophile or other
specialty stores, chains, franchises, one stops, individual stores or any other
stores who normally and traditionally sell audio and video products embodying
the performances of musical, literary or theatrical talent. These outlets
include, without limitation, any " Internet," "online" or new technological
sales outlets such as MP3, MP4, soft music downloads now know or to be developed
in the future. The exclusive distribution rights granted to the Distributor
pursuant to this Agreement expire twenty-four (24) months (the "Primary Contract
Period") from the date first written above. The Supplier controls the exclusive
right to extend and renew this Agreement by exercising options ("Option
Periods") as defined in this Paragraph. The length of each consecutive option
shall be for a period of One (1) year commencing upon the expiration of the
Primary Contract Period or the then current Option Period. Each option will be
deemed automatically exercised by Supplier unless Supplier delivers notice to
Distributor of its intention to terminate. Said notice to terminate shall be
delivered to Distributor no later than Thirty (30) days prior to the expiration
of the current Primary Contract or Option Period. It shall be made in writing
and mailed to Distributor by Certified or Registered mail, return receipt
requested in order to be deemed delivered. The Supplier will not sell any
products with specifications substantially comparable to those of the Products.
Notwithstanding anything in the foregoing paragraph, in the event Supplier
wishes to exercise its option to terminate this Agreement at the end of the
Primary Contract Period or the then current Option Period and in consideration
of the fact that the Distributor shall be responsible for manufacturing,
duplicating and packaging of the Products as set forth herein, the then current
Primary Contract or Option Period shall be extended until such time as
Distributor has recouped any and all expenses, costs or other recoupable amounts
as incurred by the Distributor as a result of the sale of Products. Once
Distributor has recovered any and all expenses, costs or other recoupable
amounts, the Supplier shall have the right to exercise its option to terminate
this Agreement.
5. Distributor's Responsibilities. The Distributor agrees to manufacture and
distribute the Products to any authorized dealers as defined herein. The
Distributor will maintain an inventory of Products and warehousing facilities
sufficient to adequately serve the demands of its dealers on a timely basis. The
Supplier agrees to provide the Distributor with the necessary Masters, complete
artwork, including label copy, liner notes and credits in completed film form,
as well as licenses, approvals, consents and permissions necessary to
manufacture, duplicate and distribute the Products.
5.1 Supplier's Responsibilities. Supplier agrees to supply Distributor with
different photographs and biographical material pertaining to the Products as
may be needed for promotion, merchandising, in-store display and advertising. If
any such material is inaccurate, misleading, obscene or an invasion of anyone's
privacy, then Distributor shall have the right, but not the obligation, to
correct, edit, delete or revise such information and to eliminate any
inaccuracy, or misleading materials.
Distributor shall have the right to charge the actual cost or expense of making
such changes against any sums due Supplier under this Agreement. Distributor
agrees to consult with Supplier before making any of the changes. Distributor's
inadvertent failure to consult with Supplier regarding the changes shall not be
deemed a breach of this Agreement.
5.1.1 Live Performances. The Supplier does hereby agree to perform or to permit
the public performance of the Masters by means of radio broadcast, television
broadcast or any other method now or hereafter known including new technologies.
5.2 Promotional Efforts. The Supplier will be solely responsible for
all-promoting, publicizing, advertising, marketing, and merchandising efforts
necessary to generate airplay and the sale of the Products. Excluding Section
5.2, the Distributor shall, at its sole discretion, advertise, publicize, market
and promote the Products in the media of its choice after prior notice and
consultation with Supplier. For each one hundred (100) compact discs, LP's,
singles or tapes that Distributor ships to its dealers for which royalties shall
be payable hereunder, Distributor shall have the right to ships its dealers, on
a no-charge basis or at a cost which is fifty (50%) percent or less of
Distributor's regular wholesale price five (5) compact discs, ten (10) LP's,
singles or tapes for which royalties shall not be payable to Supplier. No
royalties shall be payable for compact discs, LP's, singles or tapes used for
the purpose of publicity or advertising, for records distributed to radio
stations, television stations, motion picture companies, publishers or others,
for Product used on transportation facilities or as in-store play samplers, for
records sold as cutouts or overstock or for records sold as scrap after prior
notice to and consultation with Supplier. Notwithstanding anything to the
contrary hereinabove set forth, if Distributor changes its overall policy with
respect to Product shipped to dealers on a no-charge basis or at a cost which is
fifty (50%) percent or less of Distributor's regular wholesale price on which
royalties are not payable, then Distributor shall have the right to change the
limitations hereinabove set forth in accordance with such new policy after prior
notice and consultation with Supplier.
5.3 Participation by Distributor. For Products selling One Thousand (1000) units
and for each increment of One Thousand units sold thereafter, Distributor agrees
to hold from its share of royalties and to place in a separate Advertising
Escrow Account, an amount equal to fifty ($0.50) cents per unit sold. Said
account to be used for the purpose of advertising and promoting the Product.
This expense will be deemed a non-recoupable advance to the Supplier and is
meant to promote, expose and market the Products.
5.3.1 Participation by Supplier. For Products selling One Thousand (1000) units
and for each increment of One Thousand units sold thereafter, Supplier
authorizes Distributor to hold from its share of royalties and to place in a
separate Advertising Escrow Account, an amount equal to Fifty ($0.50) cents per
unit sold. Said escrowed amounts to be used for the purpose of advertising and
promoting the Product.
5.3.2 Use of Advertising Escrow Account. It is the sole discretion of the
Supplier to direct the Distributor, in writing, as to whether funds deposited in
it Advertising Escrow Account are to be used for advertising space or time
solely for the promotion of its Products or as part of cooperative advertising
buys in which Supplier is promoted along with other Suppliers or Artists of like
or similar style, image and audience appeal. If Supplier agrees to participate
in cooperative advertising buys, Distributor agrees to allocate advertising
space, type size, placement and all other aspects of the advertising equally
among the participant Suppliers. Notwithstanding anything in Section 11.1.1,
upon expiration of this Agreement, including all extensions and renewals, the
Supplier's share, in the amount of fifty (50%) percent of the balance remaining
in the Advertising Escrow Account will be credited against any recoupable
advances, costs, expenses advanced to the Supplier by the Distributor. Any
remaining funds will be payable to the Supplier in the form of a certified check
during the quarterly payment period directly after the date of expiration or
termination.
5.4 Supplier Packaging. The Distributor will distribute Products with all
packaging, warranties, and disclaimers designated by the Supplier and will
require all the Dealers to adhere to the terms applicable to such Products.
5.5 Reports. The Distributor will mail to Supplier no later than fifteen (15)
days after the end of each month during the term of this Agreement including any
extensions, renewals or revisions and quarterly for twenty-four (24) months
after the expiration or termination of this Agreement, a report customized to
the Supplier's needs, showing the preceding month's current inventory of each
Product, the quantity of each Product shipped, the number of returns or refunds
on Products, the balance of Supplier's Advertising Escrow Account and other
relevant information for the prior month as requested by Supplier.
5.6 Compliance with Laws. The Distributor will comply with all material
applicable present and future federal, state, county, local, and, where
necessary, foreign laws, ordinances, and regulations relating to the sale of the
Products.
5.7 Service Support. Subject to the Distributor's customer service policy and in
union with the Supplier, the Distributor will provide sales support including
without limitation, returns processing, End-User inquiries, field account
maintenance and mutually approved sales incentives, in the form of "free goods",
etc.
6. Payment Terms. Distributor will pay to Supplier, on a quarterly basis, fifty
(50%) percent of the wholesale price as set forth in Exhibit B of this Agreement
after deducting all taxes and duties and Distributor's customary container
charges (i.e. the container charges which Distributor customarily charges a
majority of the suppliers then under exclusive term distribution agreements with
Distributor). With respect to the distribution of Product outside of the United
Stated for which Distributor receives payment or credit, Distributor shall
calculate the applicable container charge on the basis of the retail price less
all taxes and duties only if the licensee accounting to Distributor for the
particular sales concerned ha computed the container charge applicable to the
Distributor on a basis which is less all taxes and duties; otherwise Distributor
shall calculate the applicable container charge hereunder on the basis of the
wholesale list price inclusive of taxes and duties. At the present time,
Distributor's customary container charges are as follows for the following
Products: twelve (12%) percent of the retail list price for compact discs, disc
records, (other than seven-inch singles released in a standard generic sleeve,
(for which there is no packaging deduction and other than those listed below);
ten (10%) percent of the retail list price for cassette tapes or digital audio
tapes (DATS). For all sales transacted through Distributor's Internet retail CD
store, Distributor will pay to Supplier, on a quarterly basis, fifty (50%)
percent of the retail price for any sales transacted through Distributor's
on-line CD retail store and MP3, MP4 or other soft music download site owned and
controlled by Distributor.
6.1 Masters & Packaging. The Supplier will provide appropriate art and masters
as requested by the Distributor to permit Products to be manufactured by
Distributor at the manufacturing facility of Distributor's choice. The Supplier
agrees to comply with these requests at no additional charge (other than
transportation charges) provided that the Distributor furnishes the Supplier
with shipping instructions at least five (5) days prior to shipment. The
Supplier agrees to supply art, graphics, film, geographical material, press
clippings or any other item to be used for promotional or advertising purposes
by the Distributor. The Distributor agrees to provide displays, rack dividers or
other forms of " in-store" display as required or by its distribution outlets.
The Distributor's costs would be recoupable expenses, deductible from Supplier's
royalties payable, itemized and included on the reports as defined in Section
5.4 herein.
6.2 Warehousing. Deleted intentionally.
7. Financial Condition. The Distributor represents and warrants that it is and
at all times during the term of this Agreement will remain in good financial
condition, solvent and able to pay its bills when due. From time to time, on
reasonable notice by the Supplier, an audit of the Books and Records pertaining
to this Agreement can be scheduled as long as it is during normal business
hours, at Suppliers sole expense, at a place and time designated by Distributor
and no more frequently than once in any contractual year of this Agreement. If
errors or discrepancies are found, the responsible Party shall reimburse or
correct the error within thirty (30) business days together with Supplier's
reasonable audit cots. Interest will accrue on any delinquent amounts owed to
the Supplier at the rate of one (1%) percent per month, or at the maximum
permitted by applicable law, whichever is less.
7.1 Pricing. The Supplier is free to determine its own suggested resale prices
for the Products.
8. Risk of Loss. The Distributor assumes the risk of loss and damage of the
products in transit from the Distributor's shipping point to the point of
destination as well as once Product is warehoused.
9. Distributor Duties. The Distributor agrees to honor all replacement requests
from Dealers or End-Users pursuant to the terms of the End-User Agreement
pertaining to the defective units. The Distributor will instruct all the Dealers
to submit all replacement requests to the Distributor.
9.1 Additional Protection. If, within any six (6) month period, twenty (20%)
percent or more of the Products, while within the warranty period specified in
this Agreement, exhibit defects of the same kind and nature, and such defects
are the result of faulty design or workmanship or defects in materials arising
from any cause for which the Distributor is responsible, then the Distributor
agrees to give compensation, or render assistance, at the Distributor's sole
expense, by delivery of replacement Products found to be effective to the place
designated by the Distributor. If the cause of the defects is the responsibility
of the Supplier, then the Supplier agrees to give compensation or render
assistance to re-record, mix or master the Product to correct the defects. The
Distributor will provide the Supplier a written report of all warranty claims at
least once every three (3) months.
9.2 Indemnification. Deleted Intentionally.
10. Ownership Warranty and Indemnification. The Supplier warrants to the
Distributor that the Products are the originals with the Supplier, the Products
do not infringe upon any copyright or other proprietary rights of others, the
Supplier has full power and authority to grant the rights herein granted to the
Distributor and the Supplier has not previously or otherwise granted any other
rights in the Products to any third party that conflict with the rights in this
Agreement granted to the Distributor. The Supplier agrees to defend at its
expense and hold the Distributor harmless from any claim against the Distributor
resulting from a breach of any of the warranties set forth above and to pay any
reasonable costs, damages, or expenses (including attorneys' fees) arising from
any such claim. The Supplier will have sole control of the defense, all
negotiations and settlement. The Distributor will promptly notify the Supplier
in writing of any such claim and, at the Supplier's request and expense, provide
the Supplier with all available information to enable the Supplier to defend the
same. Following notice of a claim or a threatened or actual suit, the Supplier
will immediately, at its own expense, procure for the Distributor the right to
continue the use of the Products subject to such claim, demand, or, having
failed to obtain such right, replace or modify such Products to make them
non-infringing, or having failed to replace or modify the Products, refund to
the Distributor the purchase price of all unsold products. If the Distributor
elects to replace any of the Products, such replacement will substantially meet
the performance and interface specifications of the replaced Products. The
warranties stated in this Section would survive the expiration or termination of
this Agreement.
11. Terminate Events. This Agreement may be terminated by either Party upon the
occurrence of any assignment for the benefit of the creditors, or any
bankruptcy, reorganization, or other proceeding under any bankruptcy or
insolvency law which is initiated by the other party, or is initiated against it
and not dismissed or stayed within thirty (30) days, a material breach by the
other party of any of the terms of this Agreement, which breach is not remedied
by the other party within thirty (30) days of the other party's receipt of
notice of such breach or upon the sale or distribution of the Products in
violation of the Distributor's exclusive distribution rights as described in
Section 4.1. The written notice of termination will be given by registered or
certified mail, in which event this Agreement will terminate thirty (30) days
from the date of mailing of the notice providing Distributor is not able to cure
said breach during that time and without relinquishing any of Supplier's right
to pursue remedies other than termination. Distributor warrants and represents
that Supplier's Products shall be distributed via Valley Media, if distributor
discontinues or terminates its distribution agreement with Valley Media
Distributor has ninety (90) days to secure comparable distribution or Supplier
shall have the right to terminate this Agreement.
11.1 Supplier's Early Termination. The Supplier may terminate this Agreement at
any time during the Primary Contact Period or in any of the Option Periods upon
receipt of a bona fide offer to Supplier from a major record or distribution
company, major being defined by the standards and traditions of the Music
Industry (i.e. Sony, Universal, etc.). Notwithstanding anything in the foregoing
sentence, the Distributor is hereby granted the right of first refusal providing
Distributor with the opportunity to submit a counter-offer within five (5)
business days from the date of the bona fide offer to Supplier, that is of a
comparable or more favorable term to the Supplier . If Supplier accepts
Distributors counter-offer then both Parties agree to negotiate the new
agreement in good faith.
11.1.1 Early Termination. If Supplier declines Distributor's counter-offer, and
chooses to terminate this Agreement, entering into a new recording or
distribution agreement, as defined herein within twelve (12) months from the
date of the early termination, Supplier agrees to pay or cause to be paid
directly to the Distributor a sum equal to one (1) percent of retail sales on
any product released by Supplier during the term of any new agreement.
Distributor will continue to distribute any and all product distributed under
this Agreement to date. Not withstanding any rates as set forth in Exhibit B,
upon early termination of this Agreement, the following Post Term Royalty rates
will apply to the Product set forth in Exhibit A and be payable to Distributor;
Year One-After Early Termination -fifteen (15%) percent; Year two-After Early
Termination-ten (10%) percent; Year Three-After Early Termination five (5%)
percent; and nothing thereafter. Further, Supplier agrees to abide by all other
terms and provisions governing the manufacture, distribution, sale, quality
control and End-User services as set forth herein including, but not limited to
the Supplier's Advertising Escrow account. The Distributor may, at its
discretion, choose to manufacture the distributed product in order to maintain
inventory levels as needed. In the event that Distributor does manufacture
Products, all expenses and costs shall be deemed recoupable advances and be
deductible from Supplier's share of royalties as et forth herein upon expiration
of the Post Term, all rights, inventories, Product, royalties and Supplier's
share of the Advertising Escrow Account will revert to Supplier.
11.2.1 Early Termination Buy Out. Notwithstanding anything stated in the above
Sections, in the event of early Termination as set forth in Section 11.1.1,
Supplier may elect to buy out Distributor by way of a flat fee buy out. Said
amount to be negotiated at the time of Early Termination, in good faith and
agreed upon, in writing by all Parties.
In the event of a flat fee buy out all rights, product, inventory, royalties,
future overrides, accrued Advertising Escrow Accounts, art, masters and other
items as set forth herein shall revert back to Supplier.
12. Fulfillment of Obligations. Any termination of this Agreement will not
otherwise release either party from its obligation to pay any sum that may be
then or thereafter owing to the other party nor operate to discharge any
liability incurred by either party prior to any such termination. Except as
qualified by the preceding sentences, neither party will, by reason of the
termination of this Agreement, be liable to the other for any damages arising
out of any such termination.
12.1 Effect of Termination and Survival. Except in the event of Early
Termination, the Distributor shall have the right to continue all display,
advertising, and use of all the Supplier names, trademarks, logos, and
designations and will use, advertise or display any such names, logos
trademarks, or designations.
13. Protection of Information. The Parties agree to hold Information in
confidence, except as permitted by this Agreement, as it uses to protect its own
confidential information. If used in a manner contrary to the terms of this
Section, the other party will have the right. To injunctive relief enjoining
such attempts, it being agreed that legal remedies are inadequate. No press
releases or other like publicity or advertising of any nature regarding this
Agreement that mentions this Agreement or the other party by name will be
released by a party without the prior written agreement of the other party.
Without the prior written consent of the Supplier, the distributor will refrain
from copying, reverse engineering, disassembling, de-compiling, translating, or
modifying the Products, or granting any other person or entity the right to do
so.
13.1 Notification. The Distributor will promptly notify the Supplier of any
claims, or notification that its marketing, licensing, support, or service may
or will infringe the Intellectual Property Rights of any other person or entity
and any determination or notification that any person or entity is or may be
infringing the Intellectual Property Rights of the Supplier. The Distributor
will assist the Supplier in the protection and defense of such Intellectual
Property Rights.
14. Assignment. Except as set forth herein, neither this Agreement nor any of
its rights, in whole or in part, will be assignable or transferable by either
party without the express written consent of the other party. This Agreement
will be binding upon and take effect for the benefit of the successors and
assigns of the parties to this Agreement.
14.1 Waiver, Amendment, Modification. No waiver, amendment or modification,
including those by custom, usage of trade, or course of dealing, of any
provision of this Agreement will be effective unless in writing and signed by
the party against whom such waiver, amendment or modification is sought to be
enforced. No waiver by any party of any default in performance by the other
party under this Agreement or of any breach or series of breaches by the other
party of any of the terms or conditions of this Agreement will constitute a
waiver of any subsequent default in performance under this Agreement or any
subsequent breach of any terms or conditions of that Agreement. Performance of
any obligation required of a party under this Agreement may be waived only by a
written waiver signed by a duly authorized officer of the other party, that
waiver will be effective only with respect to the specific obligation described
in that waiver.
14.2 Force Majeure. Neither party will be deemed in default of this Agreement to
the extent that performance of its obligations, or attempts to cure any breach,
are delayed or prevented by reason of circumstance beyond its reasonable
control, including without limitation fire, natural disaster, earthquake,
accident or other acts of God ("Force Majeure"), provided that the party seeking
to delay its performance gives the other written notice of any such Force
Majeure within 15 days after the discovery of the Force Majeure, and further
provided that such party uses its good faith efforts to cure the Force Majeure.
If there is a Force Majeure, the time for performance or cure will be extended
for a period equal to the duration of the Force Majeure. This Article will not
be applicable to any payment obligations of either party.
14.3 Settlement of Disputes. Each party acknowledges that, if there is any
breach including, without limitation, unauthorized use of Confidential
Information, the non-breaching party will suffer injury that cannot be
compensated by money and therefore will not have an adequate remedy at law. If
either party institutes an action to enforce the provisions of this Agreement
which may be brought in either New York County or Rhode Island, such party will
be entitled to obtain such injunctive relief or other remedy from a court of
competent jurisdiction as may be necessary to prevent or curtail any such
breach. These will be in addition to and without prejudice to such other rights
as such party may have in law or in equity.
14.3.1 Any dispute or claim arising out of this Agreement other than those set
forth in Section 14.3, or any aspect of the creation, validity, interpretation,
breach, or termination of this Agreement will be submitted to binding
arbitration to be held in Providence, Rhode Island before a panel of three
arbitrators.
Either party may demand arbitration in writing, serving on the other party a
statement of the dispute, controversy, or claim, and the facts relating to it,
in reasonable detail, and the arbitrator nominated by that party. Within thirty
(30) days after such demand, the other party will name its arbitrator, and the
two arbitrators named by the parties will, within ten (10) days, select a third
arbitrator. The arbitration will be filed with and governed by the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA"). The
reasonable expenses of arbitration will be borne by the party against whom the
decision is rendered, or apportioned in accordance with the decision of the
arbitrators if there is a compromise decision. Judgment upon any award may be
entered in any court of competent jurisdiction. All notices from one party to
the other relating to any arbitration under this Agreement will be in writing
and will be effective if given in accordance with Section 14.7 below.
14.4 Proprietary Information. Each party acknowledges that it may be furnished
with or may receive or have access to information or material that relates to
past, present or future Products, and marketing plans, "Proprietary
Information." The Parties agree to preserve the confidentiality of the
Proprietary Information, whether disclosed to the other party before this
Agreement is signed or afterward, including the terms of this Agreement. A party
will not disclose or disseminate the Proprietary Information for its own benefit
or of any third party. The previously stated obligations do not apply to any
information that is publicly known, is given to a party by someone else who is
not obligated to maintain confidentiality or a party had already developed prior
to the day this Agreement is signed, as evidenced by documents. Neither party
will take or cause to be taken any physical forms of Proprietary Information
without the other party's written permission. Within three (3) days after the
termination of this Agreement, a party will return to the other party all copies
of Proprietary Information in tangible form. Despite any other provisions of
this Agreement, this Section will survive termination of this Agreement.
14.5 Cumulative Rights. Any specific right or remedy provided in this Agreement
will not be exclusive but will be cumulative upon all other rights and remedies
set forth in this section and allowed under applicable law.
14.6 Governing Law. This Agreement will be governed by the substantive laws of
the State of Rhode Island applicable to Agreements made and fully performed in
Rhode Island by Rhode Island residents. The parties acknowledge that this
Agreement expresses their entire understanding and Agreement, and that there
have been no warranties, representations, covenants or understandings made by
either party to the other except such as are expressly set forth in this
section. This Agreement supersedes and otherwise renders null and void any and
all prior Agreements or contracts, whether written or oral. This Agreement may
be executed in multiple counterparts, any one of which will be deemed an
original, but all of which will constitute one and the same instrument. If any
provision of this Agreement is found invalid or unenforceable under judicial
decree or decision of the American Arbitration Association or of a court, the
remainder will remain valid and enforceable according to its terms.
14.7 Notices. All notices required or permitted under this Agreement will be in
writing and will be delivered or mailed certified return receipt requested to
the respective parties at the addresses set forth above or at such other address
as such party will specify to the other party in writing. Any notice required or
permitted to be given by the provisions of this Agreement will be conclusively
deemed to have been received on the day it is delivered to that party by U.S.
Mail with Acknowledgment of Receipt or by any commercial courier providing
equivalent acknowledgment of receipt. Captions and section headings used in this
Agreement are for convenience only and are not a part of this Agreement and will
not be used in construing it.
We have carefully reviewed this contract and agree to and accept its terms and
conditions. We are executing this Agreement as of the day and year first written
above.
SUPPLIER DISTRIBUTOR
/S/ /S/
---------------------------------------- --------------------------------
Kendrick J. Davis p/k/a "Jeru the Damaja" David DeBaene
President, Knowsavage Productions, Inc. President, Open Door Music, Inc.
<PAGE>
Exhibit A
Products
--------
JERU THE DAMAJA PRESENTS THE SUPA-HUMAN KLIK
FEATURING MIZMARVEL
<PAGE>
Exhibit B
CDs, Vinyl, EPs, Double Disc Sets 50% 50%
Suggested Retail Price Net Royalty Artist Share OD Share
--------------------------- ---------------- ---------------- ---------------
$8.97 $4.30 $2.15 $2.15
$9.97 $4.80 $2.40 $2.40
$10.97 $5.25 $2.63 $2.62
$11.97 $5.75 $2.88 $2.87
$12.97 $6.20 $3.10 $3.10
$13.97 $6.70 $3.35 $3.35
$14.97 $7.20 $3.60 $3.60
$15.97 $7.65 $3.83 $3.82
$16.97 $8.15 $4.08 $4.07
$17.97 $8.60 $4.30 $4.30
$18.97 $9.10 $4.55 $4.55
$19.97 $9.60 $4.80 $4.80
$20.97 $10.05 $5.03 $5.02
$21.97 $10.55 $5.28 $5.27
$22.97 $11.00 $5.50 $5.50
$23.97 $11.50 $5.75 $5.75
$24.97 $120.00 $6.00 $6.00
Cassettes & EPs 50% 50%
Suggested Retail Price Net Royalty Artist Share OD Share
--------------------------- ---------------- ---------------- ---------------
$5.90 $2.80 $1.40 $1.40
$6.98 $3.35 $1.68 $1.67
$7.98 $3.80 $1.90 $1.90
$9.98 $4.80 $2.40 $2.40
$10.98 $5.25 $2.63 $2.62
$11.98 $6.76 $2.88 $2.87
$12.98 $6.20 $3.10 $3.10
$13.98 $6.70 $3.35 $3.35
$14.98 $7.20 $3.60 $3.60
$15.98 $7.65 $3.83 $3.82
$16.98 $8.15 $4.08 $4.07
Cassette Singles & EPs 50% 50%
Suggested Retail Price Net Royalty Artist Share OD Share
--------------------------- ---------------- ---------------- ---------------
$4.99 $2.40 $1.20 $1.20
$5.49 $2.64 $1.32 $1.32
$5.99 $2.85 $1.43 $1.42
$6.49 $3.10 $1.55 $1.55
$6.99 $3.35 $1.68 $1.67
$7.99 $3.85 $1.93 $1.92