| Subject: Master licence agreement |
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Date Posted: 03:46:10 06/03/03 Tue
9
Master licence agreement1
(IMPORTANT NOTE: Particular consideration should be given to the matters referred to in Paragraphs 10 [15] et seq ante, and the provisions of this Form should be adjusted carefully in the light of those matters and relevant commercial factors.)
THIS AGREEMENT is made the [………] day of […………]
BETWEEN:
(1) (name of company) whose registered office is at (address) (registered in England no [………]) (the ‘Company’) and
(2) (name of company) whose registered office is at (address) (registered in England no [………]) (the ‘Licensee’ which expression shall include all Associates sublicensees and assignees and other persons with the prior written consent of the Company deriving title through or from the Licensee)2
[725]
IT IS AGREED as follows:
1 Grant of rights
In consideration of the obligations warranties and undertakings of the Licensee in this Agreement and subject to and conditional upon their full and timely performance and observance the Company:
1.1 grants to the Licensee the non-exclusive right to manufacture Records in the Territory and the sole and exclusive right to sell and distribute Records in the Territory during the Term provided however that the right to distribute the Records by means of Rental is expressly excluded from the rights granted to the Licensee2;
1.2 grants to the Licensee the non-exclusive right to reproduce distribute and display the Publicity Material solely in conjunction with the Records and subject to any terms and conditions from time to time notified by the Company in the Territory during the Term;
1.3 undertakes to effect Delivery by no later than the Delivery Date.
[726]
2 Company’s warranties
The Company warrants undertakes and agrees with the Licensee that:
2.1 the Company is free to enter into this Agreement and grant the Licensee the rights granted in it and is not under any disability restriction or prohibition which might prevent the Company from performing or observing any of the Company’s obligations under this Agreement;
2.2 the Company has not entered into and shall not enter into any arrangement which may conflict with this Agreement;
2.3 all Third Party Liabilities shall be the sole responsibility of the Company and the Licensee shall not incur any liability for these;
2.4 following the expiry of the Term by effluxion of time the Licensee shall have the non-exclusive right subject to the terms and conditions of this Agreement for the further period of 3 calendar months to sell off Records previously manufactured by the Licensee during the Term provided that in the last 2 calendar quarters of the Term the Licensee shall not manufacture Records in excess of the average aggregate number of Sales of Records in the preceding Accounting Period3.
[727]
3 Remuneration
The Licensee agrees to pay or procure the payment to all relevant third parties in a timely manner all sums in respect of Copyright Liabilities relating to the Records and undertakes to pay to the Company:
3.1 the Advance4 as to [……]% on signature of this Agreement and [……]% on Delivery;
3.2 the Royalties on each Accounting Date in accordance with the provisions of this Agreement;
3.3 such costs in respect of the manufacture and delivery to the Licensee of the Delivery Material as may be notified by the Company in writing5.
[728]
4 Licensee’s undertakings
The Licensee warrants undertakes and agrees with the Company:
4.1 that save as expressly granted in this Agreement all rights and title in and to the Records the Delivery Material and the Recordings are expressly reserved to the Company;
4.2 that the Licensee shall ascertain the identity of the owners of all rights of copyright in all music and lyrics contained in the Records and the identity of the owners’ representatives in each country of the Territory and prior to any exercise by the Licensee of the rights granted under this Agreement the Licensee shall obtain all necessary returns and pay all Copyright Liabilities and other payments whatever required to exploit the rights granted in this Agreement6;
4.3 not by any act or omission to impair or prejudice the copyright in the Records or deal with the Delivery Material so that any third party might obtain any lien or other right of whatever nature incompatible with the rights of the Company and to ensure that all Records and artwork manufactured by the Licensee contain full and accurate notices and credit attributions;
4.4 on the expiry or sooner determination of the Term at the Licensee’s cost and expense to return to the Company the Delivery Material and all other material supplied by the Company in the same condition as when supplied to the Licensee;
4.5 that the Licensee shall not create any promotional material or artwork relating to the Records without the prior written consent of the Company and in respect of any material commissioned or manufactured by the Licensee the copyright shall be secured in the name of the Company and title to all physical material shall belong to and be dealt with as if such physical material had been supplied by the Company and the Company shall at all times have unrestricted access to the same for the purposes of the Company.;
4.6 throughout the Term to supply the Company with a monthly statement of the shipment and net sales of Records which have taken place pursuant to this Agreement;
[729]
4.7 not to sell or to consign any Records on a sale or return or stock balancing basis or permit any Records to be sold or exported outside the Territory unless with the prior written consent of the Company7;
4.8 to give full particulars to the Company forthwith on becoming aware of any actual or threatened claim by any third party in connection with the Records;
4.9 punctually to pay to the Company all sums owing to the Company under this Agreement;
4.10 not to assign charge license sub-license or otherwise part with possession of the benefit or burden of this Agreement without the prior consent of the Company;
4.11 not to copy or duplicate the Delivery Material or any part of it otherwise than for the purpose of manufacturing and exploiting Records in accordance with this Agreement;
4.12 to pay all costs fees import export and reimportation duties customs freight packaging transportation collection charges sales taxes other taxes of whatever nature insurance premiums and to account to the Company for any tax credits however arising;
4.13 to retain total control and actual possession at all times of the Delivery Material and maintain the Delivery Material safe and secure in appropriate storage facilities the risk in the Delivery Material passing to the Licensee on the Company’s appropriation in order to effect Delivery pursuant to this Agreement;
4.14 if any part of the Delivery Material is lost or damaged in whole or in part to pay to the Company the cost of replacing the same as a contract debt and to swear such affidavits and statements and do any such reasonable acts as may be required by the Company as to the fact of such loss in order to claim insurance proceeds or for any other reason whatever;
4.15 to notify the Company within 48 hours of import or receipt of any Delivery Material of any damage to or defect in it failing which the Licensee shall be deemed irrevocably to have accepted delivery of the same;
[730]
4.16 to effect and keep in place adequate insurance on a comprehensive basis against all risks relating to the Delivery Material and to give irrevocable written directions to the appropriate insurers to name the Company as named insured and where appropriate or required by the Company as sole loss payee;
4.17 to conform with all local industry trade union guild collective bargaining and other agreements relating to the manufacture and distribution of Records;
4.18 to release the Records throughout the Territory within [6] months of Delivery and maintain the Records in release in the Territory throughout the Term8;
4.19 to advertise the Records throughout the Territory in the same manner as other major records advertised by the Licensee in the Territory and not to remove any of the details or credits from the Publicity Material or alter their size order or prominence9;
4.20 to exploit the rights granted to the Licensee to the best of the Licensee’s skill and ability with the utmost dispatch and to ensure the highest possible Royalties payable to the Company and to ensure that the Records are given fair and equitable treatment and not discriminated in favour of any other records which the Licensee may have for distribution in the Territory10;
4.21 at the end of the period referred to in Clause 4.4 at the direction of the Company to permit the Company to purchase from the Licensee all stocks of Records then unsold at a unit cost equal to the actual cost of manufacture to the Licensee and to return all Delivery Material and other material relating to the Records in the possession of the Licensee to the Company or if the Company shall direct to procure its destruction and provide certificates and affidavits of destruction in such form as may be satisfactory to the Company;
4.22 to indemnify and keep fully indemnified the Company from and against all actions proceedings claims demands costs (including without prejudice to the generality of this provision the legal costs of the Company on a solicitor and own client basis) awards and damages arising directly or indirectly as a result of any breach or non-performance by the Licensee of any of the Licensee’s undertakings warranties or obligations under this Agreement.
[731]
5 Royalties11
The Licensee undertakes to pay to the Company by way of Royalties:
5.1 [……]% of the Royalty Base Price on Sales of Albums in vinyl disc or tape form;
[……]% of the Royalty Base Price on Sales of Singles in vinyl disc or tape form;
[……]% of the Royalty Base Price on Sales of Records in compact disc or other configurations;
5.2 In respect of Records sold through any club operation12 or otherwise sold at substantially reduced price the Royalty Base Price shall be the price charged by any such club or the price at which such club accounts to the Licensee in respect of sales of records or the actual selling price to the customer provided that the Licensee undertakes not to effect any such sales without the prior written consent of the Company.
5.3 In the case of Records incorporating material other than the Recordings the Royalties shall be computed by multiplying the royalty rate by a fraction the numerator of which is the total of all material derived from the Recordings and the denominator the total of all material whether or not derived from the Recordings.
5.4 No Royalties shall accrue on Records distributed free as samples or for the purpose of publicity provided that the total so distributed shall not exceed [……] in respect of any Recording during the Term without the prior written consent of the Company.
5.5 The Licensee shall not have the right to withhold any part of sums due to the Company as a reserve against returns and/or credits and in the event that the Licensee is required by law to make any withholding from sums to be remitted to the Company the Licensee shall prior to the making of any withholding of payment furnish the Company with evidence satisfactory to the Company in its entire discretion as to the Licensee’s obligation to make such withholding of payment.
[732]
5.6 The Licensee undertakes to make all payments required under this Agreement by bankers draft in pounds sterling drawn on an English bank or by telegraphic transfer to the account of the Company as follows:
Bank: [……]
Branch: [……]
Address: [……]
Account No: [……]
Sort Code: [……]
Attention: [……]
5.7 The Licensee undertakes that all receipts payable to the Company will be converted into pounds sterling at the best obtainable rate of exchange on each Accounting Date provided that in the event of any continuous materially adverse currency movement of longer than 7 days duration during any Accounting Period it shall be the responsibility of the Licensee to ensure that all receipts are converted into pounds Sterling as soon as practicable following receipt and the Licensee shall follow all directions to the Company from time to time relating to currency conversion.
5.8 If exchange control or other restrictions prevent or threaten to prevent the remittance to the Company of any money payable under this Agreement the Licensee shall immediately advise the Company in writing and follow the Company’s instructions in respect of the money to be remitted including if required depositing the same with any bank or other person designated by the Company at such location as may be designated by the Company.
5.9 If any withholding or other taxes are required to be deducted from any money provided to be remitted to the Company pursuant to this Agreement it shall be the responsibility of the Licensee to ensure that no improper deductions are made and that the Company is provided with all necessary receipts certificates and other documents and all information required in order to avail the Company of any tax credit or other fiscal advantage.
[733]
6 Royalty accounting
6.1 The Licensee shall on each Accounting Date render to the Company a full and complete statement showing all money owing to the Company under this Agreement in respect of the preceding Accounting Period.
6.2 The statement of account referred to in Clause 6.1 shall be in such form as the Company shall require and shall show Records manufactured and where stored Records shipped Records returned and Records sold and each such statement shall be accompanied by payment of all amounts owing without reserve.
6.3 Pounds sterling shall be the currency of account and where any sums are received in a currency other than pounds sterling the same shall be converted at the [mid-market rate calculated using the Financial Times index on the date of receipt or best obtainable rate of exchange on the date payment is due].
6.4 Value Added Tax shall be payable by the Licensee to the Company in respect of all payments made to or to the order of the Company pursuant to this Agreement.
6.5 The Licensee shall keep full and proper books of account relating to the exploitation of its rights under this Agreement and the Company or its representative being a certified or chartered accountant not otherwise engaged on an audit of the Licensee or any of its associated group or subsidiary companies shall have the right not more than twice in any period of 12 months during normal business hours and on not less than 2 days’ written notice during the Term and for 3 years thereafter to inspect and take copies of such books of account. In the event that such audit or inspection reveals any deficiency in money paid to the Company under this Agreement then the Licensee shall forthwith pay the same to the Company together with interest on it from the date first due calculated with monthly rests at a rate of [……]% above prime or base rate charged by its bankers to the Company from time to time and shall pay all reasonable costs incurred by the Company directly as a result of such inspection.
6.6 The Licensee shall keep confidential and shall not disclose to any third parties (other than professional advisers where necessary) the results of any such inspection or audit or any of the terms of this Agreement or any matters incidental thereto or relating to the business of the Company and shall indemnify the Company fully in respect of any breach of its obligations under this Clause.
[734]
7 Force Majeure
The Company shall not be liable to the Licensee for failing to supply or procure the supply of the Delivery Material and any other material to be supplied under this Agreement due to circumstances beyond its control and it shall not be liable for any expenses or consequential losses whatever thereby suffered by the Licensee.
8 No agency
The Licensee warrants that it is not the nominee or agent of any undisclosed principal and warrants that it will assume sole and complete responsibility for the performance of the obligations in this Agreement expressed to be performed by the Licensee.
[735]
9 Determination
It shall constitute the repudiation by the Licensee of its obligations under this Agreement and at any time the Company may serve written notice on the Licensee accepting such repudiation and determining the Licensee’s rights under this Agreement if:
9.1 the Licensee fails to pay any amount due under this Agreement in full within 5 business days of its due date and such failure is not remedied within [3] business days of receipt of written notice;
9.2 the Licensee is in breach of any other material term of this Agreement which is incapable of remedy or if capable of remedy is not remedied within 7 days of the Licensee becoming aware of it;
9.3 any of the Licensee’s representations shall prove to have been incorrect when made or become materially incorrect and the Company’s rights and entitlements under this Agreement are materially and adversely affected;
9.4 the Licensee transfers disposes of or threatens to transfer or dispose of any part of its assets which is likely in the reasonable opinion of the Licensor to prevent or materially to inhibit the performance by the Licensee of its obligations under this Agreement;
9.5 any indebtedness guarantee or similar obligation of the Licensee or of any guarantor of the Licensee becomes due or capable of being declared due before its stated maturity or is not discharged at maturity or the Licensee or any guarantor of the Licensee defaults under or commits a breach of the provisions of any guarantee or other obligation (whether actual or contingent) of any agreement pursuant to which any such indebtedness guarantee or other obligation was incurred all or any of which shall in the reasonable opinion of the Company materially affect its rights and entitlements under this Agreement;
9.6 the Licensee is declared or becomes insolvent;
9.7 the Licensee convenes a meeting of its creditors or proposes or makes any arrangement or composition with or any assignment for the benefit of its creditors or a petition is presented or a meeting is convened for the purpose of considering a resolution or other steps are taken for the winding-up of the Licensee (save for the purpose of and followed by a voluntary reconstruction or amalgamation previously approved in writing by the Company) or if an incumbrancer takes possession of or a trustee, receiver, administrative receiver, administrator, liquidator or similar officer is appointed in respect of all or any part of its business or assets or any distress execution or other legal process is levied or enforced upon or threatened or taken against any of such assets;
9.8 the Licensee shall abandon the business of exploiting Records.
[736]
10 Effect of determination
10.1 On determination under Clause 9 of the Licensee’s rights under this Agreement:
(a) the Company may without notice retake possession of the Material and for that purpose be entitled to enter upon any land or building in the possession power or control of the Licensee where the Material may be situated or believed to be situated;
(b) the Material shall no longer be in the Licensee’s possession or control with the Company’s consent;
(c) without prejudice to any right to damages of the Company the Licensee shall immediately pay to the Company all sums owing and whether or not then due under this Agreement;
(d) the Licensee shall assign to the Company all its right title benefit and interest in any agreements entered into by it in respect of the Records (including the right to receive any money payable pursuant to such agreements) on terms satisfactory to the Company and shall immediately thereafter give notice of such assignment to the other parties to such agreements in a form and manner approved by the Company.
10.2 On the termination repudiation or expiry of the Term the Licensee shall be responsible at its own risk for re-delivery of the Delivery Material and the Records to such address in the United Kingdom as the Company may direct in good and serviceable condition (fair wear and tear excepted) and free of any advertising permitted in writing by the Company.
[737]
11 Definitions and interpretation
11.1 The following definitions apply in this Agreement:
‘Accounting Date’
30 days from the end of each Accounting Period
‘Accounting Period’
successive 3 monthly periods ending on 31 March 30 June 30 September and 31 December in each year during the Term
‘Advance’
the non-returnable sum of £[……]
‘Agreement’
this agreement and any and all schedules annexures and exhibits attached to it or incorporated in it by reference
‘Album’14
any sound alone record derived in whole or in part from the Master Tapes and comprising not less than [8] nor more than [14] Tracks and having not less than 35 minutes’ or more than [60] minutes’ playing time
‘Associate’
any person firm or company which is a connected person (as defined in the Income and Corporation Taxes Act 1988 Section 839) of the Licensee or which is an associated company of the Licensee within the meaning of Section 416 of that Act15
‘Copyright Liabilities’16
all sums arising on or as a result of the manufacture or exploitation of records payable to the owners of any right of copyright or other right whatever in the Master Tapes or the Records including expressly without limitation any form of statutory mechanical performance royalty or other payments whatever to publishers or other third parties and all sums payable in respect of the public performance and/or broadcast of the Records
[738]
‘Delivery’
delivery by the Company to the Licence of the Delivery Material [or at the discretion of the Company a bill of lading airways bill or other note evidencing physical delivery of the Delivery Material to the Licensee’s carrier]
‘Delivery Date’
(date)
‘Delivery Material’
the Master Tapes and other material relating to the Recordings short particulars of which are set out in Schedule 1
‘Master Tapes’
duplicate master tapes containing the Recordings
‘Material’
the Delivery Material and the Records
[‘Packaging Charges’:
in respect of vinyl disc Records [……]% of the Retail Price
in respect of Records in tape configuration [……]% of the Retail Price
in respect of Records in compact disc configuration [……]% of the Retail Price
in respect of Singles in 7 inch or 12 inch configuration [……]% of the Retail Price]17
‘Publicity Material’
the material relating to the Recordings short particulars of which are contained in paragraphs [……] of Schedule 1
‘Recordings’
recordings of the Artists and musical works short particulars of which are contained in Schedule 2
[739]
‘Records’18
any sound alone recordings manufactured by the Licensee in any configuration whether now known or invented in the future and derived in whole or in part from the Master Tapes
‘Rental’
Any rental or lending of the Records within the meaning of the Copyright, Designs and Patents Act 1988 Sections 18A(2) to (6) and/or 182C(2) to (7)
‘Retail Price’19
the retail selling price from time to time approved by the Company for the sales of Records in the Territory
‘Royalties’
all sums payable to the Company by way of royalty under this Agreement
‘Royalty Base Price’20
the Retail price [after the deduction of the Packaging Charges]
‘Sales’21
100% of all Records sold in the Territory during the Term
‘Single’
any sound alone record derived in whole or in part from the Master Tapes
‘Term’22
the period of (specify) commencing on (specify)
‘Territory’
(specify territory)
‘Third Party Liabilities’23
any and all sums payable under any agreement with any person who rendered services supplied goods or made available finance in connection with the production of the Recordings other than the Copyright Liabilities
‘Track’
a sound recording the equivalent in playing time of not less than 2½ minutes of continuous sound and capable of inclusion in an Album or Single
[740]
11.2 Any reference in this Agreement to any statute or statutory provision order or regulation shall be construed as including a reference to that statute or statutory provision order or regulation as from time to time amended modified extended or re-enacted whether before or after the date of this Agreement and to all statutory instruments orders regulations and directives modifying or extending the same24.
11.3 Unless the context otherwise requires words denoting the singular shall include the plural and vice versa and words denoting any one gender shall include all genders and words denoting persons shall include bodies corporate unincorporated associations and partnerships.
11.4 The expression ‘copyright’ means the entire copyright including rental and lending right database right and design right subsisting under the laws of the United Kingdom25 and all analogous rights subsisting under the laws of each and every jurisdiction throughout the world26.
11.5 Unless otherwise stated time shall be of the essence for the purpose of the performance of the Licensee’s obligations under this Agreement.
11.6 Unless otherwise stated references to clauses sub-clauses sub-paragraphs schedules annexures and exhibits relate to this Agreement.
[741]
12 Notices
(continue as in Form 3 Clause 11 [658] ante, renumbering accordingly)
13 Miscellaneous
(continue as in Form 3 Clause 12 [659] ante)
14 Counterparts
(continue as in Form 3 Clause 13 [660] ante)
IN WITNESS of which the parties have executed this Agreement as a deed the day month and year first above written
SCHEDULE 1
Delivery Material
(insert details)
SCHEDULE 2
Recordings
(insert details)
[742]
EXECUTED AND DELIVERED as a deed
)
by two duly authorised officers
)
for and on behalf of
)
(name of Company)
)
(signatures of two directors or
director and secretary)
EXECUTED AND DELIVERED as a deed
)
by two duly authorised officers
)
for and on behalf of
)
(name of Licensee)
)
(signatures of two directors or
director and secretary)
1 This Form is intended for use in circumstances where the Company is licensing to a licensee rights in certain delivery material. It is drafted from the point of view of the Company and should be contrasted with the provisions of Form 8 [704] ante.
2 Although the licensee is restricted from parting with possession or assigning or sub-licensing by virtue of the provisions of Clause 4.10, the provision is intended to extend the scope of the licensee’s warranties and undertakings for the benefit of the Company in the event of any subsequent permitted sub-licence. As to performers’ property rights and rental rights see Paragraphs 96 [148] et seq ante.
3 Where the Company is not granting all media rights to the distributor, it is important for the Company to reserve the rights of its other licensees in the territory to manufacture materials to enable the exploitation of rights licensed to them. Even where all rights are granted to the distributor in respect of a territory, if the territory includes the Company’s principal laboratory the Company will itself wish to place orders and will also wish such laboratory to service orders from licensees in other territories and the grant of manufacturing rights to the distributor should therefore be similarly limited. The distributor, for its own part, may seek to limit the ability of the Company to grant manufacturing rights.
4 The sell-off rights permit the licensee to dispose of goods manufactured by the licensee during the term. The licensee may require a reduced royalty rate to accompany the sell-off right which this agreement does not provide.
5 The advance is not expressed to be recoupable from the royalty.
6 The licensee will normally seek to identify and/or limit such costs.
7 In practice, the licensee will require some assistance from the Company in order to perform such obligations. The licensee will wish to limit such obligations to the recommended rate prescribed by the appropriate Mechanical Collection Society in the territory being licensed.
8 If the territory includes part of the European Community, this provision will be subject to the provisions of the EC Treaty. See also Paragraphs 10 [15] et seq ante.
9 The licensee may seek to amend the obligation to keep the product in continuous release.
10 The licensee may not be prepared to assume the advertising obligation.
11 The licensee may seek to limit the exploitation obligations so that they are consistent with the licensee’s reasonable business judgment and exercised in its reasonable discretion.
12 If the advance is to be recoupable, this clause may commence with the words ‘Subject to recoupment of the Licensee of the Advance from the Royalty’.
13 See Form 1 note 49 [631] ante.
14 The number of tracks and number of minutes’ playing time in respect of any album is subject to negotiation.
15 See the Income and Corporation Taxes Act 1988 ss 416 as amended, 417(3), (4) (44 Halsbury’s Statutes (4th Edn) TAXATION).
16 This definition is included for the purpose of passing these liabilities on to the licensee.
17 See note 20 below.
18 The rights granted are limited to audio rights. In practice, they may be further limited to the right to release albums or singles.
19 See Form 1 note 99 [632] ante. Whilst there is no requirement on the licensee to sell records at the retail price, the royalty is calculated as a percentage of it.
20 In fact, the Company may wish to exclude the reference to packaging charges and have the royalty expressed as a percentage of the retail price (which will be higher).
21 Sales are based on 100% and extend to all records sold in the territory irrespective of the identity of the party selling them.
22 The precise length of the term is generally subject to commercial negotiation.
23 This definition is inserted for the purpose of the warranty from the Company in Clause 2.3 in favour of the licensee.
24 This provision is inserted to avoid the operation of the Interpretation Act 1978 Section 23 (41 Halsbury’s Statutes (4th Edn) STATUTES).
25 As to copyright in the UK see Paragraphs 36 [48] et seq ante.
26 See Form 1 note 107 [632] ante.
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