HEADS OF AGREEMENT
From: Cheyenne records GmbH
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ b. Munchen
("we"/"us")
To: Skreem Entertainment Inc.
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Dated Friday, May 14, 2004
Re. Exclusive Distribution and Service Agreement for musical group "3rd Wish"
Dear Charlie,
Please find enclosed our revised proposal. We hope this comes up to your final
approval as we need to sign the contract today.
1. Distribution Agreement:
You great us the exclusive right to distributed and sell the Recording
to be delivered by you including the exclusive right to use the Artist's name
and professional name, photographs, biography and likeness in connection with
the sale and promotion of the recordings under the following conditions:
Territory: Germany, Switzerland and Austria (GSA)
Term: 5 years + 6 months non-excl. sell-off period
following the termination of this agreement
pursuant to chapter 7 below
Option: 2 options on follow-up albums provided that
- for the first option - the first album or
one of the singles releases out of the first
album have reached TOP 50 of the German
Media Control Charts in Germany within the
first 9 month after its release and - for
the second option - the second album has
reached TOP 40 of the German Media Control
Charts in Germany within the first 9 months
after its release Each option shall be
exercised within 12 months after the release
of the immediately preceding album
Accounting: monthly within 45 days after the end of each
calendar month we shall be entitled to
establish a reserve up to a maximum of
twenty per cent (20%) each of which reserve
shall be liquidated within 6 months.
Your shall be responsible for all marketing spendings in connection with the
promotion and exploitation of the Recording such as production of video,
TV-Adverts, Photo Shooting, etc.
Well shall promote (TV placement such as VIVA, VIVA Plus, MTV, MTV 2 Pop, Onyx,
etc., radio and print) and market the recordings internally. In the event that
we decide to use external promotional sources the costs will be covered by
Skreem Records.
You hereby guarantee that Artist's next single release "Obsession" will be a
collaboration between Artist and popular singer Shaggy as feature vocal artist.
2. Further Service: For the term of this agreement pursuant to chapter 7 below
we will procure the following additional services: a) Executive booking of
commercial concerts and concert tours throughout the territory (G/S/A). The cost
of promotion activities including travel, hotel, and catering either to be
covered by the host and/or promoter of the event or by Skreem
Records.
b) Securing the personal appearances of the Artist, including without
limitation, any public appearances (i.e. in motion pictures,
television, radio, online media etc.);
c) Securing Acquiring adverts with the appearance of Artist,
endorsements and commercial tie-ups, TV - and Advert co
operations; d) Securing the use of the Artist name, likeness,
signature, voice, photograph, caricatures and biography for
purposes of
advertising, trade, and merchandising;
e) Music publishing / sub publishing throughout the territory at a
split of 75 (you)/25 (us) publishing revenues.
3. Warranty
You warrant, undertake and agree that we shall have the full and
unfettered right to exploit the Recording and all other rights granted to us
under this agreement throughout the territory and that the exploitation by us
shall no infringe the rights of any third party.
4. Costs
a) You shall be responsible for all manufacturing costs, marketing
spendings in connection with the promotion and exploitation of the
Recording such as production of video clips, TV-Advertising budget,
Photo Shooting, creation of the artwork etc. In Addition, Artist shall
be available to us free of charge for advertising and promotional and
other appearances under this agreement. And you solely shall reimburse
Artist's respective reasonable traveling and hotel expenses plus per
diems (if applicable). You shall pay all royalties due to Artist and
all mechanical royalties payable to the writer(s) and publisher(s) of
the musical compositions recorded by you out of your share of the net
receipts.
5. Distribution and Service Fees
a) In respect of the Distribution Agreement subject to clause 1 of this
agreement we shall receive a distribution fee of 30% of all net
receipts prior to deducting any sub-distribution fee and we shall pay
out of our share all fees payable to our sub-distributor (which is
currently Universal Music) or any other third party. Net receipts shall
mean gross receipts less applicable VAT (Value Added Tax of currently
16%). We shall further receive a service fee of 15% of all net receipts
on the basis as it is described in sentence 1 of this chapter. Our
total share of the net receipts shall be thus 45%
b) In consideration of our services subject to clause 2 of this agreement
we shall receive 35% of all net receipts. Net receipts in respect of
this subparagraph B) shall mean gross receipts paid to you by any third
party (tour promoter, merchandiser etc.) less VAT.
c) In respect of our participation and support to develop the Artist in all
medias, we shall receive an override of 3,5 % of all ppd of all net sales of
records of the Artist outside the territory and 10% of all net receipt you
receive for exploitation subject to this Proposal outside the territory,
excluding the US and Canada including advances on royalties for a period of
five years commencing with the release of the 1 album of Artist in the
territory. In the event that the single "Obsession" with the featured
artist Shaggy goes top 3 in the German Media Control Sales Charts we shall
receive an override of 4% of the ppd of all net sales of records of the
artist outside the territory and 15% of all net receipts you receive for
exploitations subject to this proposal outside the territory, excluding the
US and Canada including advances on royalties for a period of five years
shall negotiate our override in good faith with respect to all sales in the
US and Canada but in no event we shall receive less than 50% of the override
otherwise applicable.
All payments hereunder shall be made plus VAT, if applicable. If you are
not liable to income taxation in the Federal Republic of Germany, we will
be entitled to withhold unless you present a tax exemption form approved by
the German IRS under the German / US double taxation treaty. In the event
Cheyenne Records is legally required to withhold income tax in Germany we
will provide a certificate of German IRS to you of all taxes paid by us to
German IRS on your behalf.
6. Termination
This agreement shall terminate 12 months after the release of the last
contractual album according to chapter 1 of this agreement.
7. Long Form Agreement
You and we hereby agree that this agreement shall be replaced as soon as
reasonably practical hereafter by respective long-form agreements embodying
the terms set out herein (with all other terms to be negotiated between you
and us in good faith). Until such time as the long-form agreements are
entered into this agreement shall remain in full force and effect.
8. Jurisdiction
This agreement shall be governed by and construed in accordance with the
laws of Germany and the courts of which shall be the courts of competent
jurisdiction.
Would you kindly signify your acceptance of the above terms by signing and
returning the enclosed duplicate copy of this letter.
Yours Sincerely,
/s/ ▇▇▇ Chialo
For and on behalf of Cheyenne Records
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
For and on behalf of Skreem Entertainment