270 Legal [Sample Agreements]

UPSTREAMING AGREEMENT

AN AGREEMENT made as of the 25th day of January, 2006, between Universal Records, a division of UMG Recordings, Inc. 1755 Broadway, New York, New York 10019 (hereinafter referred to as “Universal”) and American Southwest Music Distribution, Inc. at 8721 Sunset Blvd, Suite #7, Los Angeles, CA 90069, Attn: Marcus Sanders, Esq. (hereinafter referred to as “you”).

1. BACKGROUND; PURPOSE OF AGREEMENT

1.01. You and Universal hereby acknowledge that contemporaneously herewith you and Universal are entering into the following agreements (the “Related Agreements”) each of even date herewith: (a) an Exclusive Manufacturing and Distribution agreement pursuant to which you grant to Universal the exclusive right to manufacture, sell distribute, and otherwise exploit Distributed Product in the United States (the “Distribution Agreement”); and (b) an Exclusive Foreign License Agreement pursuant to which you grant to Universal the exclusive right to manufacture, sell, distribute, and otherwise exploit Distributed Product throughout the world other than the United States (the “License Agreement”).

1.02 You and Universal mutually desire to enter into this agreement to provide for Universal to have the ability to select one (1) or more Distributed Artist(s) (as such term is defined in the Distribution Agreement) and enter into an agreement with you pursuant to which you will furnish to Universal the exclusive recording services of the applicable Distributed Artist, in which event all Masters recorded under or otherwise subject to such agreement and all other materials contemplated by such agreement and/or subject thereto will not be subject to the provisions of the Related Agreements but instead will be subject to this agreement and the other agreements referred to herein. The purpose of this agreement is to set forth the procedure by which Universal may select such Distributed Artist(s) and enter into the respective exclusive recording agreement(s) with you with respect to each selected Distributed Artist, and also to set forth the other terms and conditions governing the rights and obligations of you and Universal in connection with the foregoing.

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3. UNIVERSAL’S RIGHTS; UPSTREAMING

3.01. Subject to the other terms and conditions contained herein, you hereby grant to Universal the exclusive and irrevocable right (“Upstream Right”) during the Term hereof (subject to paragraph 3.02(b)(2) below) to select one (1) or more Distributed Artist(s) for the purpose of you and Universal entering into an agreement pursuant to which you will furnish to Universal the exclusive recording services of the selected Distributed Artist and in connection therewith certain Masters embodying the performance of the particular Distributed Artist will be subject to the provisions of the applicable Furnishing Agreement and no longer subject to the provisions of the Related Agreements.

3.02. Universal may exercise its Upstream Right with respect to a particular Distributed Artist by sending you written notice (“Upstream Notice”) at any time during the following periods:

(a) during the period commencing on the date any Distributed Album has been delivered to Universal under the Distribution Agreement, and ending on Universal’s United States retail street date for that Distributed Record; or

(b)

(1)

(A) at any time during the period commencing on the date any Distributed Album that has been commercially released in the United States by Universal under the Distribution Agreement has achieved sales in the United States equal to or in excess of twenty five thousand (25,000) units (as reported by Soundscan or a similar mechanism for measuring retail sales) (“Sales Threshold”), and ending on the date such Album has achieved sales in the United States (as reported by Soundscan or a similar mechanism for measuring retail sales) equal to fifty thousand (50,000) units (such period, the “Soundscan Period”).

(B) Notwithstanding anything to the contrary contained in paragraph 3.02(b)(1)(A) above, if any Distributed Record has achieved sales in the United States in excess of the Sales Threshold but Universal has not exercised its Upstream Right in respect of the particular Distributed Artist as of the date the Sales Threshold is achieved, then the following will apply: (i) you will notify Universal in writing that the Sales Threshold has been achieved and that Universal has not exercised its Upstream Right with respect to the particular Distributed Artist (“Upstream Warning Notice”); (ii) the Soundscan Period will be deemed to continue until the date thirty (30) days after Universal’s receipt of the Upstream Warning Notice (the “Extension Period”); and (iii) Universal will have the right to exercise its Upstream Right with respect to the applicable Distributed Artist at any time before the end of the Extension Period.

(2) Notwithstanding anything to the contrary contained herein, if Universal’s United States retail street date (“Release Date”) for any Distributed Record falls on a date that is less than six (6) months from the date the Term of the Distribution Agreement expires or terminates, then Universal will have the right to exercise its Upstream Right pursuant to paragraph 3.02(b)(1) above in respect of the particular Distributed Artist whose performance is embodied on such Record (each, a “Post Term Artist”) at any time up to and including the date six (6) months after the Release Date for the particular Record (subject always to the provisions of paragraph 3.02(b)(1)(B) above), provided that the particular Record satisfies the sales-related conditions set forth in said paragraph 3.02(b)(1) above during such six (6) month period. The period commencing on the last day of the Term hereof and ending on the date that is six (6) months after the Release Date of the applicable Distributed Record is hereinafter referred to as the “Post Term Period” for the particular Post Term Artist. Notwithstanding the expiration or termination of the term of the Distribution Agreement, you and Universal hereby agree that the terms and conditions of this agreement (including, without limitation, Universal’s Upstream Right and all of all of Universal’s other rights hereunder and all of your obligations hereunder) will remain in full force and effect in all respects during the applicable Post Term Period for each Post Term Artist. In connection with the foregoing, you agree that during the applicable Post Term Period for each Post Term Artist you will not (i) terminate the term of the applicable Distributed Artist Agreement; or (ii) assign any of your rights or obligations under the particular Distributed Artist Agreement; or (iii) amend or modify the particular Distributed Artist Agreement; or (iv) waive any of your rights under the particular Distributed Artist Agreement in any manner that might impair the rights granted to Universal hereunder; or (v) enter into an agreement with any Person other than Universal pursuant to which you furnish the recording services of the particular Post Term Artist to such other Person or pursuant to which any Person other than Universal is otherwise granted the right to distribute and/or otherwise exploit the results and proceeds of the applicable Post Term Artist’s recording services; or (v) take (or fail to take) any action necessary or desirable to keep the particular Distributed Artist Agreement in full force and effect during the applicable Post Term Period.

3.03. If Universal exercises its Upstream Right with respect to any Distributed Artist, then the following will terms and conditions will apply:

(a)

(1) as of the date of Universal’s Upstream Notice (“Commencement Date”) for the applicable Distributed Artist you and Universal will be deemed to have entered into an agreement pursuant to which you agree to furnish to Universal the exclusive recording services of the particular Distributed Artist in the form attached hereto as Annex “A” (“Furnishing Agreement”), subject to the other terms and conditions set forth in this agreement, including, without limitation, the provisions of this paragraph. Each Distributed Artist that you and Universal enter into a Furnishing Agreement with respect to is sometimes hereinafter referred to as an “Upstreamed Artist”. In connection with the foregoing, the terms and conditions of each such Furnishing Agreement shall be terms and conditions set forth in Annex “A” attached hereto, except that such terms and conditions shall be deemed to be supplemented and modified for each Furnishing Agreement on an Upstreamed Artist-by-Upstreamed Artist basis in accordance with the terms and conditions set forth in Schedule “1” attached hereto and incorporated herein by this reference. With respect to the provisions set forth in Schedule “1” attached hereto and the application thereof to each Furnishing Agreement, promptly following your receipt of the Upstream Notice for the Upstreamed Artist concerned (but in no event later than ten (10) business days after the date of the Upstream Notice concerned) you will furnish Universal in writing with all of the information required by Universal to determine the applicable provisions addressed in said Schedule “1” and any other information or documents requested by Universal in connection with the applicable Furnishing Agreement (such as, by way of example only, the name(s) of the members of the Upstreamed Artist and/or a complete and accurate copy of the particular Distributed Artist Agreement with respect to the Upstreamed Artist concerned). Without limiting the foregoing, at Universal’s request you further agree to execute an agreement between you and Universal in a substantially the same form and containing substantially the same provisions as the form agreement attached as Annex “A” attached hereto except as modified and supplemented in accordance with the provisions set forth in Schedule “1” attached hereto for the Upstreamed Artist concerned and containing complete information with respect to the applicable Upstreamed Artist; provided, however, that any failure, delay, or refusal by you or Universal to so execute such agreement shall not in any manner (aa) limit any of Universal’s rights hereunder or under the applicable Furnishing Agreement or any of your obligations hereunder or under the particular Furnishing Agreement; or (bb) impede or compromise the enforceability and effectiveness of this agreement or the applicable Furnishing Agreement.

(2) You agree with respect to each Upstreamed Artist to deliver to Universal an agreement between Universal and the applicable Upstreamed Artist in the form of Exhibit “A” annexed to the Furnishing Agreement (the “Inducement Letter”) that has been executed by you and the applicable Upstreamed Artist. You will deliver the Inducement Letter for each Upstreamed Artist to Universal promptly (but in no event later than ten [10] days) following the Commencement Date for the applicable Furnishing Agreement. Notwithstanding anything to the contrary contained herein, Universal may at any time refuse to continue to perform any of its obligations under this agreement and/or the applicable Furnishing Agreement until you have delivered to Universal an original copy of the Inducement Letter signed by all of the members of the particular Upstreamed Artist and all other applicable parties thereto (including, without limitation, you).

(b) effective as of the Commencement Date: (1) the then-current Distributed Album that Universal exercised its Upstream Right in connection with (“First Upstreamed Album”) will be subject to the terms and conditions of the applicable Furnishing Agreement in respect of the Upstreamed Artist concerned; (2) the First Upstreamed Album will constitute the Album in fulfillment of your Recording Commitment for the initial Contract Period under the applicable Furnishing Agreement (as used in the preceding clause, the terms “Recording Commitment” and “initial Contract Period” will have the meanings ascribed to such terms in the applicable Furnishing Agreement); (3) all Record packaging artwork and other materials created or used in connection with the First Upstreamed Album will constitute Artwork or similar materials under the applicable Furnishing Agreement and will be subject to the terms and conditions thereof; (4) all of the Masters embodied on the First Upstreamed Album and all Masters recorded by the Upstreamed Artist concerned on or after the applicable Commencement Date will constitute Masters recorded under that Furnishing Agreement and will be subject to the terms and conditions contained therein; and, for the avoidance of doubt (5) the First Upstreamed Album and all Masters embodied thereon and all Masters recorded by the Upstreamed Artist concerned (and Albums recorded by such Upstreamed Artist) on or after the applicable Commencement Date will not be subject to the provisions of the Related Agreements except as otherwise provided herein.

3.04.

Without limiting the generality of the foregoing, but for the avoidance of doubt, if Universal does not exercise its Upstream Right with respect to a particular Distributed Artist at any time hereunder, such election will not act as a waiver of Universal’s rights hereunder or otherwise prevent Universal from subsequently exercising its Upstream Right in respect of that same Distributed Artist at any other time hereunder in accordance with the provisions contained herein.

3.05. Universal is under no obligation whatsoever to exercise its Upstream Right with respect to any Distributed Artist(s).

3A. MISCELLANEOUS COPYRIGHT ASSIGNMENT PROVISIONS

3A.01. (a) Notwithstanding anything to the contrary contained herein or in any Furnishing Agreement (and to the degree this Article 3A is inconsistent with the provisions of Article 9 of the Furnishing Agreement, without otherwise limiting the provision of such Article 9, the provisions of this Article 3A will control), if Universal exercises its Upstream Right in respect of any Distributed Artist, then as of the Commencement Date for the applicable Furnishing Agreement you will be deemed to have sold, transferred, and assigned to Universal, its successors and assigns, absolutely and forever, and without any limitations or restrictions whatsoever, fifty percent (50%) of all rights, titles and interest of every kind, whether now or hereafter in existence, in and to the following, subject always to the provisions of paragraph 3A.03 below: (1) all of the Masters embodied on the First Upstreamed Album (“Existing Masters”); (2) all Videos in existence as of the applicable Commencement Date embodying said Masters; and (3) all Record packaging artwork and other Artwork used or created for use in connection with the First Upstreamed Album and/or the Masters embodied thereon and/or the marketing, promotion, and advertising of the foregoing (the items set forth in the foregoing clauses (1), (2) and (3) are hereinafter collectively referred to as the “Existing Materials”), including, without limitation, all copyrights (and/or similar statutory protections) and extensions and renewals of copyright, perpetually, throughout the Territory, free of encumbrances. As of the applicable Commencement Date, (i) the Existing Masters will be deemed to be Masters made under the particular Furnishing Agreement during the initial Contract Period thereof and will be subject to the terms thereof and (ii) the Existing Materials will be deemed to be “Materials” under the applicable Furnishing Agreement. You agree to timely execute any documents Universal may require to effectuate the foregoing assignment and, in the event you fail to sign such documents within ten (10) days (or less, if needed and stated in the request) after your receipt of Universal’s written request therefor, Universal may sign such documents in your name (and you hereby appoint Universal your agent and attorney-in-fact for such purposes) and make appropriate disposition of them consistent with this agreement.

(b) Notwithstanding your fifty percent (50%) ownership rights in and to the Existing Materials, you hereby further grant, transfer and assign to Universal (and any Person authorized by Universal) the unlimited, sole, and exclusive right throughout the universe in perpetuity to: (1) register, administer, and enforce such jointly-owned copyrights and other intellectual property rights in and to the Existing Materials in the joint name of you and Universal (including, without limitation, the right to sue or commence any similar action or proceeding for any infringement of any such rights (past, present, or future) and to collect damages therefor); (2) manufacture, distribute, advertise, market, promote, sell, license, and otherwise exploit the Existing Materials in any and all media now or hereafter known and by any and all means or devices now or hereafter known; and (3) otherwise exploit the entirety of all right, title and interest, including, without limitation, the copyright, in and to all Existing Materials. Upon Universal’s request, you will cooperate with Universal in connection with the registration, administration, and enforcement of such rights.

(c) You warrant and represent that: (1) you are the sole, exclusive and perpetual owner of all of the Existing Materials and all rights in them, under copyright and otherwise, throughout the Territory; (2) as of the Commencement Date for the Furnishing Agreement concerned, none of the Compositions embodied in the Existing Masters has been performed by the applicable Upstreamed Artist for the making of any Master Recordings other than the Existing Masters embodied on the applicable First Upstreamed Album; (3) as of the Commencement Date for each particular Furnishing Agreement neither you nor any other Person (including, without limitation, any Related Person) has licensed, sold or assigned to any other Person or otherwise disposed of any right, title or interest in or to the Existing Materials; (4) Each Person who rendered any service in connection with, or who otherwise contributed in any way to the making of the Existing Materials, or who granted to you any of the rights referred to in the applicable Furnishing Agreement, had the full right, power and authority to do so, was not bound by any agreement that would restrict such Person from rendering such services or granting such rights, and has granted to you in writing all necessary rights in connection with such services or contributions necessary for you to fulfill your obligations hereunder and under the applicable Furnishing Agreement; (5) all recording costs and all other costs and expenses with respect to the making of the Existing Materials have been paid (as used in this clause (5), “recording costs” means items or costs that would constitute Recording Costs under the applicable Furnishing Agreement if paid or incurred by Universal); (6) all necessary licenses for the recording of the Compositions performed in the Existing Masters have been obtained from the copyright owners, and all monies payable under such licenses or otherwise by reason of such recording have been timely paid; (7) none of the Existing Materials (including, without limitation, the performances embodied on the Existing Masters) nor any authorized use of the Existing Materials by Universal or its grantees, licensees or assigns will violate or infringe upon the rights of any Person; (8) all of the Existing Masters were made in accordance with the rules and regulations of the American Federation of Musicians, the American Federation of Television and Radio Artists, and all other unions having jurisdiction; and (9) if you have any knowledge of any claims, actions, suits or proceedings pending, or, to your knowledge, threatened, arising out of, in connection with, or in relation to any Existing Materials hereunder or that may interfere with Universal’s rights hereunder or any assignment of the particular Existing Materials as set forth in paragraph 3A.01(a) above, you will notify Universal in writing of such promptly (but in no event later than five (5) business days) following your initial discovery of same, it being agreed that the foregoing shall not be deemed a waiver of any of your obligations to indemnify Universal as provided herein or in the applicable Furnishing Agreement.

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