Racer Records - Sample Contract

The following is the text of Racer Records' standard contract. It is intended for information purposes only (although if you wish to use it for entertainment purposes, that's okay too).

Please, please, please look at the Sample Contract Commentary file. It contains detailed notes about each paragraph of this sample contract, in addition to providing some general background and some suggestions for further reading.

Master Purchase Agreement

AGREEMENT made this _________________ day of _________________ , 19______ by and between RECORD COMPANY Racer Records of San Francisco, California (herein called "Company") and MASTER OWNER __________________________________ of __________________________________ (herein called "Seller").

Witnesseth:

WHEREAS, Seller is the owner of a master recording and of the sound recording copyright therein containing the following compositions performed by _________________,

WHEREAS, Seller desires to sell and assign the said master recording and sound recording copyright to Company,

NOW, THEREFORE, in consideration of the foregoing and of the mutual promises hereinafter set forth, it is agreed:

1. Seller, at or prior to the execution hereof, will furnish Company, at Seller's expense, with a master tape of the aforesaid master recording, in good condition, suitable to the purpose of manufacturing a top quality phonograph record.

2. Seller represents that it possesses all rights in, and the full and exclusive ownership of the said master recording, including the musical and other performances embodied therein and any copyright or similar property right recognized or created by law in master recordings in the United States of America and the other countries to which the rights of Company hereunder extend. Seller hereby assigns, grants and conveys all of its rights in the said sound recording copyright and said master recording and the musical performances embodied therein exclusively to Company for the full term of copyright, including renewal and extension, for the entire world.

3. Seller further represents and warrants:

a. It has the full right, power and authority to enter into and to perform this agreement, and it has not granted and it will not grant or attempt to grant to any other person, firm or corporation, rights of any kind inconsistent with the aforesaid grant and which rights would derogate from the rights granted to Company hereunder.

b. It has not heretofore assigned, pledged or hypothecated the master recording or any part thereof; the same is in all respects free and clear of any and all liens, mortgages, debts and other encumbrances; and no recordings derived from the master recording have been heretofore manufactured or sold as phonograph records or tapes; except that in the event that recordings derived from the master recording have been heretofore manufactured or sold and Seller has an inventory thereof, Seller transfers same to Company at Seller's cost.

c. It has paid all costs incurred by reason of the manufacture of or creation of the said master recording, including, but not limited to, musicians, singers, arrangements, copying and studio expenses, and all costs related to the creation and design of the package.

d. There is no claim or litigation pending or threatened involving the master recording or any part thereof.

e. Neither the master recording nor any part thereof nor the exercise by any authorized party of any right granted to Company hereunder will violate or infringe upon the rights of any third party.

f. Either subsection (1) or (2) applies depending upon which subsection is initialed by Seller.

(1) If Seller initials here _____ , Seller represents and warrants that in connection with the manufacture or creation of the master recording Seller has paid to the musicians (including instrumentalists, leaders, contractors, copyists, orchestrators, and arrangers) the minimum wages under the American Federation of Musicians Phonograph Record Labor Agreement and the American Federation of Television and Radio Artists "National Code of Fair Practice for Phonograph Recording" and has made the contribution to the pension welfare funds required by such agreements. Seller agrees that this representation and warranty are included for the benefit of the unions or for such person or persons as they may designate.

(2) If Seller initials here _____ , Seller does not make such a representation, but agrees to be liable for any claims or losses of any type in connection with the American Federation of Musicians Phonograph Record Labor Agreement and the American Federation of Television and Radio Artists "National Code of Fair Practice for Phonograph Recording".

4. Seller agrees to supply Company, at or before the time of execution of this agreement, with a signed copy or a photostat of a signed copy of any agreement(s) covering the services of the artist(s) recorded in the master recording which is the subject hereof.

5. Seller agrees to defend, indemnify and save Company and any of its licensees, agents and employees free and harmless against any and all claims, suits, liability, loss, damage, judgments, recoveries, cost and expense, including attorney's fees, which may be made or brought, paid or incurred by reason of any breach or claim of breach of Seller's covenants, warranties and representations hereunder. Company shall be entitled to designate the defense attorneys engaged in connection therewith. During the pendency of any claim Company may withhold moneys otherwise due to Seller, except that if no suit is filed within twelve (12) months after presentation of a claim, the moneys shall be paid to Seller.

6. As full compensation for the rights granted by Seller in the master recording(s), Company agrees to pay the following:

a. To Seller the sum of one hundred dollars ($ 100.00 ) dollars, receipt of which is hereby acknowledged as an advance against and recoupable out of any royalties or license fees which may become payable to Seller pursuant to this agreement.

b. To Seller, as to records sold within the United States, a royalty as specified in the attached schedule A for each unit manufactured and sold by Company on which is embodied any of the selections recorded in the master recording purchased hereunder.

c. To Seller, as to records sold outside of the United States, and to the extent that Company receives actual payment, a royalty at the rate of 75% of the royalty set forth in subparagraph b above.

d. No royalties shall be payable in respect of records given away for promotional purposes or sold at below stated wholesale prices to disc jockeys, record reviewers, radio and television stations and networks, motion picture companies, music publishers, Company employees or other customary recipients of promotional records or for use on transportation facilities, or records sold as scrap, salvage, overstock or "cut outs", or records sold below Company's cost of manufacturing. Company agrees to offer Seller the right of first refusal to purchase any records to be sold as scrap, salvage, overstock, or "cut outs." If records are shipped subject to a special discount or merchandise plan, the number of such records deemed to have been sold shall be determined by reducing the number of records shipped by the percentage of such discount granted and if a discount is granted in the form of "free" or "bonus" records, such "free" or "bonus" records shall not be deemed included in the number of records sold.

e. If any of the recordings in the master recording purchased hereunder are released together with or in combination with other performances or recordings in a long-playing or extended play record, royalties to Seller will be paid for only those selections which are recordings in the master recording purchased hereunder and the royalties paid shall be in the proportion that the number of selections included in such record which are recordings in the master recording purchased hereunder bears to the total number of selections embodied in such records. No royalties shall be payable in respect of such records given away for promotional purposes.

f. Company is not obligated to pay any of the moneys as noted in this paragraph to Seller until such time as Company receives a license, permission, or authority, in writing, from the owner of the copyright in the compositions that embody the masters and which Seller is selling to Company.

7. The sums to be paid by Company pursuant to the preceding paragraph are intended to include provisions for all royalties of the recording artist(s) and Seller agrees, without any cost or expense to Company whatsoever, to pay all royalties which may be or become due to artist(s) with respect to records manufactured and sold hereunder.

8. Company agrees to obtain all necessary reproduction and distribution licenses from the copyright owner of the compositions embodied in the master recording which is the subject of this agreement, and to pay mechanical license fees which may become properly due by reason of the sale of records manufactured by Company from said master. Seller represents that a reproduction and distribution license has been or will be issued by the copyright proprietor on usual terms. In the event Seller is the owner of the copyright of the compositions embodied in the master recording, then Seller agrees to grant to Company a mechanical license for the purpose of publishing, selling, or otherwise exploiting the copyrighted compositions embodied in the masters. Company agrees to compensate the copyright owner of the compositions in an amount equal to the statutory rate. No mechanical fee shall be paid on records given away for promotional purposes.

9. Payment of all sums to be paid by Company hereunder shall be made quarterly on April 30, July 31, October 31, and January 31, and shall be accompanied by a statement setting forth in reasonable detail the computation of such sums. All statements shall be binding upon Seller and not subject to objection by Seller unless specific objection in writing, stating the basis thereof, is given to Company within one (1) year from the date rendered. Seller shall have the right to inspect and make extracts of the books and records of Company, insofar as said books and records pertain to the performance of Company's obligations hereunder; such inspection shall be made on ten (10) days written notice, during usual business hours of normal business days but not more frequently than once annually in each year; except that in the event that Seller pays a fee of $250.00 to Company, Seller shall be entitled to examine said books and records of Company as many times as Seller pays the fee. In the event that Seller discovers an error in computation of royalties or payments due hereunder and that error is agreed to by Company, then Company agrees to refund the fee as noted herein.

10. Seller shall supply to Company, in writing, at or prior to execution hereof, the correct title of each recorded work embodied in the master recording; the names of the author, composer and publisher thereof, together with any additional copyright information known to Seller; the names of the recording artist(s); and a statement of whether the recording was produced subject to the American Federation of Musicians Music Performance Trust Fund agreement; and a copy of any certificate of sound recording copyright previously obtained.

11. Company will take usual and customary steps to protect the copyright in the sound recordings, including the use of appropriate notices of copyright.

12. Without limiting the generality of any of the foregoing, the exclusive rights hereby granted to Company include the following:

a. The right to manufacture, sell, lease, license, advertise or otherwise use or dispose of in any and all fields of use, or to refrain therefrom, phonograph records containing the performances embodied in the said master recording upon such terms and conditions as Company shall desire or may agree.

b. The right to sublease, sublicense, or lend to any person, firm or corporation matrices, mothers, stampers or copies or derivatives in any other form of the said master recording and to grant the right to any such person, firm or corporation to manufacture and sell phonograph records derived therefrom.

c. The right to release, advertise and sell phonograph records produced from the said master recording and to permit others to do so, under the trademark "Racer Records" or under any trademark used thereon by Company in the United States of America, or under such other trademark or name as Company shall desire or may agree.

d. The right to use and allow others to use the name, likeness and biography of each artist whose performance is embodied in the said master recording in connection with the advertising, publicizing or sale of phonograph records manufactured therefrom.

e. The right to perform publicly, or to permit the public performance, by means of radio broadcast or otherwise, or to refrain therefrom, of phonograph records manufactured from the said recording.

f. The right to use and to control the use of the said master recording, matrices, mothers, stampers, or other copies or derivatives and records produced from the said master recording, and the performances embodied therein, in all of the countries in the world.

13. Seller agrees on behalf of itself and any company or person affiliated with Seller that no recordings derived from the master recording will be sold or manufactured by them commencing with the date of this agreement. Notwithstanding what is stated in the prior sentence, Seller may purchase from Company records manufactured or owned by Company for purposes of its obligations under this contract, and Seller may sell these records at live performances in the event Seller is the performer on the master recording.

14. Seller agrees that for a period of seven (7) consecutive years from the date of this agreement it will not record or produce, nor will it permit others to record or produce, phonograph records of a performance by the recording artist(s) of the compositions embodied in the master recording purchased hereunder, for anyone other than Company.

15. Company represents its intention to promote the recordings embodied in the master recording as specified in Exhibit C. In the event that Company does not fulfill this obligation within two years from the date of this contract, Seller may purchase the master recording at the price shown in paragraph 6a. Seller retains a license to sell any existing stock in inventory and to include songs from the master recording on compilation records in order to promote and sell existing stock.

16. This agreement shall be construed only under the laws of the State of California and it cannot be modified orally. If any part of this agreement shall be invalid or unenforceable it shall not affect the validity of the balance of this agreement. Seller subjects himself to the jurisdiction of the State of California.

17. This agreement shall be binding and shall inure to the benefit of the respective parties hereto, their respective successors in interest, legal representatives and assigns, and represents the entire understanding between the parties.

18. For the purpose of this agreement, the term "record" or "phonograph record" shall mean any disc record of any speed, or any other device or contrivance for the reproduction of sound of any type, character, or description, whether now or hereafter known, which device or contrivance is intended for retail sale to the public and/or jukebox use.

19. Seller agrees that it enters into this contract with all knowledge of its terms, freely and voluntarily, and with a complete understanding of all the consequences it brings.

20. Mediation-Arbitration Clause:

If a dispute shall arise under the terms of this agreement, the party claiming the dispute shall have 30 days to notify the other party. The party not claiming the dispute shall have 30 days to remedy the dispute. In the event that the dispute is not remedied within this time period, then any party at their option shall have 10 days to submit the dispute to mediation in accordance with the rules of Arts Arbitration and Mediation Services, a program of California Lawyers for the Arts. If mediation is not successful in resolving the entire dispute, any outstanding issues shall be submitted to final and binding arbitration in accordance with the rules of that program. If such services are not available, the dispute shall be submitted to arbitration in accordance with the laws of the State of California. The arbitrator's award shall be final, and judgment may be entered upon it by any court having jurisdiction thereof.

In witness whereof, the parties hereto have entered into this agreement the day and year first above written.

_____________________          _____________________

Seller                         Racer Records

Schedule A

Pursuant to paragraph 6 of this contract, Company agrees to pay royalties to Seller for each unit sold, according to the following schedule:

For the first 1000 units sold:

$1.00 per unit sold

For units sold over 1000 but under 5000:

$1.50 per unit sold

For units sold over 5000:

$2.50 per unit sold

As stated in Paragraph 13 of this agreement, Seller may purchase records from Company for resale at live performances by Seller. As of the date of this agreement, Company's discounted price of such records sold to Seller shall be $3.50 for cassettes and $5.50 for compact discs. In the event that the suggested retail price of this album changes, this discounted price shall be revised to reflect a proportional percentage increase or decrease. No royalties or license fees will be payable on said discounted records sold to Seller.

Exhibit A

This Master Purchase Agreement transfers ownership of the master recording and of the sound recording copyright therein containing compositions performed by ____artist____, which compositions are listed below:

           Title           Length     Composer      Author      Publisher

10.

11.

12.

13.

14.

15.

Exhibit B

For the purposes of this contract, all royalty payments shall be made payable to:

__________________________________________

and shall be sent to the following address:

__________________________________________

Changes to the designated payee or to the address shall be submitted in writing to Racer Records at least two weeks before such changes are to take effect.

Exhibit C

Company agrees to perform the following promotional activities, at no cost or obligation to Seller:

Company will mail a minimum of 100 copies of the recording to radio stations
Company will reserve at least 25 additional copies of the recording for promotional purposes
Company will undertake a followup radio promotion campaign, telephoning at least 100 radio stations each week for a minimum of 8 weeks
Company will announce the release of the album on the Internet and CompuServe and make sound and graphics files available for computer users to download

This page was last updated on March 3, 2004 by Kristi Wachter.