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GL Energy & Exploration - Exclusive Manufacturing And Distribution Agreement
Exhibit 10.1
EXCLUSIVE MANUFACTURING AND DISTRIBUTION 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.
TERM
1.01.
(a)
The term of this agreement (" Term" ) will commence on the date hereof and will continue until the date two (2) years from the date hereof (" Initial Period" ), subject to paragraph 1.01(b) below and the other applicable provisions of this agreement. Each twelve (12) month period of the Term hereof is sometimes hereinafter referred to as a " Contract Year" .
(b)
You hereby grant to Universal one (1) irrevocable option (" Option" ) to extend the Term hereof for an additional period of two (2) years (" Option Period" ) on the same terms and conditions applicable to the Initial Period, except as otherwise specified herein. Universal may exercise its Option by giving you written notice at any time before end of the Initial Period. If Universal exercises its Option, the Option Period will automatically begin immediately after the end of the Initial Period.
(c)
Universal will have six (6) months from the expiration or termination of the Term hereof to sell off its existing inventory of Distributed Product on a non-exclusive basis (" Sell Off Period" ).
(d)
The period consisting of the Term hereof and the Sell Off Period is sometimes hereinafter referred to as the " Exploitation Period" .
1.02.
You and Universal hereby acknowledge that contemporaneously herewith, you and Universal are entering into the following agreement and you hereby agree to execute and deliver to Universal an exclusive foreign license agreement in respect of manufacturing, selling, distributing, and otherwise exploiting Distributed Product throughout the universe excluding the Territory hereunder (the " License Agreement" ), The Term of this agreement will be the same as and will run contemporaneously with the term of the License Agreement.
2.
UNIVERSAL'S RIGHTS
2.01.
You hereby grant to Universal and any Person authorized by Universal the unlimited right (which right will be exclusive during the Term hereof and non-exclusive during the Sell Off Period) in the Territory during the Exploitation Period:
(a)
(1)
(A)
to manufacture , distribute, sell, and otherwise exploit Distributed Product by any and all methods now or hereafter known, including, without limitation, through Normal Retail Channels and Ancillary Exploitation Channels.
(B)
Notwithstanding the foregoing, solely in respect of the exploitation of Distributed Product through Ancillary Exploitation Channels, Universal will not without your prior consent (not to be unreasonably withheld or delayed): (i) license any Master embodied on Distributed Product in the Territory: (A) for use in a motion picture, television production, or television
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advertisement or (B) for inclusion on a third party compilation Record, or (ii) use or license any Master of Distributed Product for inclusion on premium Records to promote the sale of any product or service other than Records; provided, however, that Universal' s inadvertent failure to so obtain your consent will not constitute a breach of this agreement.
(2)
Without limiting the foregoing, Universal' s rights hereunder include, without limitation the right (but not the obligation) to (A) solicit and fulfill orders for Distributed Product; (B) to advertise, promote and otherwise market Distributed Product (and to authorize other Persons to do so) through any mediums and channels and by any means whatsoever now or hereafter known, including, without limitation, the right to (i) use and authorize other Persons to use the artwork of each Record distributed hereunder in the packaging of such Record and any other materials hereunder (including, without limitation, all Materials) for the purposes of trade, advertising, marketing, promotion, and publicity, in any manner and in any medium now or hereafter known and (ii) the right to publicize, advertise, and exploit Distributed Product and to cause or permit others to do so; and (C) the right to perform Dis tributed Product publicly and to permit the public performances thereof in any medium and by any means whatsoever, whether now or hereafter known.
(b)
to use, reproduce, print, publish or disseminate (and allow others the right to use, reproduce, print, publish, or disseminate) in any medium or by any method now or hereafter known your name, the names, approved portraits, approved pictures and approved likenesses of each Distributed Artist and the individual producers and all other Persons performing services in connection with or whose performance is embodied in Distributed Product (including, without limitation, all professional, group and other assumed or fictitious names used by them), and the voice and sound effects of the foregoing Persons (or any reproduction or simulation thereof) and approved biographical material concerning them for purposes of advertising, promotion and trade in connection with you, Distributed Product or the Distributed Artist concerned, the making and exploitation of Records hereunder, Universal' s exploitation o f Distributed Product, in the marketing, promotion, and advertising of Records embodying Distributed Product, on websites, and general goodwill advertising; or Universal may, at its election, delay or refrain from doing any one or more of the foregoing.
(c)
to use all trademarks, trade names, service marks, and logos owned and/or used by you or otherwise submitted, delivered, or supplied by you to Universal in connection with Distributed Product (collectively, the " Mark" ) in the Territory in connection with Universal' s use or other exploitation of Distributed Product hereunder at no additional cost to Universal (including, without limitation, on Record packaging artwork and on advertising, marketing, and promotional materials). Notwithstanding the foregoing, Universal will not be required to use your Mark if, in Universal' s reasonable judgment, such use might violate a statute, law or regulation, or the rights of any Person. The registration of all of your Mark will be your responsibility and will be done at your sole expense. Your submission of any material which includes any Mark will be deemed to be instructions to U niversal for Universal to use the Mark as submitted. Notwithstanding anything to the contrary contained herein your Mark including, without limitation, any Mark submitted or otherwise used by you in connection with Distributed Product or in connection with any materials created in connection with Distributed Product (e.g., without limitation, Record packaging artwork, marketing, advertising, and promotional materials, and advertisements) will constitute an item of " Materials" hereunder.
2.02.
Notwithstanding anything to the contrary contained herein, Universal will have the right, without liability to you and without limiting its other rights, to decline to distribute or otherwise exploit or to discontinue the distribution or other exploitation of any Distributed Product hereunder if Universal reasonably believes that: (a) such distribution or other exploitation might violate a statute, law, or regulation or violate any rights of any Persons or might subject Universal to liability or unfavorable regulatory action; (b) the Record or any Master embodied therein is offensive to reasonable standards of public taste; (c) Universal believes that its distribution or other exploitation of such Record would
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constitute a breach by you of any of your agreements, warranties, or representations contained herein; and/or (d) such distribution or other exploitation might constitute the potential defamation or libel of any Person. Your sole remedy in the event any such Record is so rejected is the right to exclude solely the particular Record of Distributed Product from the definition of Distributed Product hereunder and enter into an agreement with a Person other than Universal solely to distribute solely such Record, provided that you and such other Person sticker or otherwise mark any such Record (at your sole cost and expense) to ensure that such Record is not returned to Universal and further provided that you will not identify or allow others to identify any such Record distributed by any other Person with Universal in any manner, directly or indirectly.
3.
DISTRIBUTION FEE; LICENSING FEE; NET PROCEEDS; PAYMENTS; ACCOUNTINGS
3.01.
(a)
In consideration of Universal providing services relating to the distribution and other exploitation of Distributed Product through Normal Retail Channels in the Territory, Universal shall be entitled to, and shall, deduct fees from Net Billings equal to twenty five percent (25%) of Net Billings hereunder, which fees Universal shall retain and utilize for its own account (" Distribution Fee" ). Notwithstanding the immediately preceding sentence, the Distribution Fee shall be twenty two and one half percent (22.5%) of Net Billings rather than twenty-five percent (25%), with respect Distributed Product distributed hereunder after the calendar month in which cumulative Net Billings hereunder exceed Eight Million Dollars ($8,000,000), and the Distribution Fee shall be twenty percent (20%) of Net Billings rather than twenty two and one half percent (22.5%), with respect to Distributed Prod uct distributed hereunder after the calendar month of the term during which cumulative Net Billings hereunder exceed Fifteen Million Dollars ($15,000,000). The foregoing Distribution Fee rate decreases, if applicable, shall apply prospectively beginning in the month following the month in which the Net Billings threshold is attained.
(b)
In consideration of Universal providing services relating to the exploitation of Distributed Product through Ancillary Exploitation Channels in the Territory, Universal shall be entitled to, and shall, deduct fees from Net Licensing Billings equal to fifteen percent (15%) of Net Licensing Billings hereunder, which fees Universal shall retain and utilize for its own account (" Licensing Fee" ).
3.02.
As used herein, " Net Proceeds" means Total Net Billings less:
(a)
the Distribution Fee
(b)
the Licensing Fee
(c)
a reserve against anticipated returns of Distributed Product distributed by Universal and/or credits for such returns during and after the Term of this agreement. In establishing such reserves, Universal will take into consideration the sale and returns history of previous Records shipped hereunder as well as that of the Record concerned, Soundscan reports (or similar retail sales reports) and reports from Universal distributor regarding to what extent the Record concerned is "selling through" at retail outlets. Universal will liquidate any such reserves within a period that does not exceed one year after the period in which such reserves were initially established, provided, if Universal makes any overpayment to you (e.g., by reason of an accounting error or by paying royalties on Records returned later), you will reimburse Universal to the extent Universal does not deduct such sum s from monies due you hereunder. Notwithstanding anything to the contrary contained herein, one hundred and eighty (180) days prior to the expiration or termination of the Term of this agreement, Universal will have the right to withhold reserves in an amount sufficient in Universal's reasonable business judgment to cover anticipated returns and credits during those last one hundred eighty (180) days and during and after the Sell Off Period, it being understood that such reserves may exceed the percentages applicable during the Term of this agreement as set forth
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above. Returns of Distributed Product will first be applied against the most recent sales and then against the oldest reserves. If the amount of actual returns and/or credits exceed the amount of reserves held by Universal then, without limiting Universal' s other rights, such amount will be paid by you within five (5) days following Universal's written demand therefore.
(d)
Any and all charges for the manufacturing or handling of Distributed Product or the reproduction of artwork, sleeves, labels, covers or other containers of such Records, as more specifically set forth in Article 6 hereinbelow.
(e)
Any and all Advances paid by Universal hereunder (it being agreed that Universal is under no obligation whatsoever to pay any Advances to you hereunder).
(f)
Any and all applicable taxes imposed on Universal with respect to the manufacture, distribution, license, sale, and/or other exploitation of Distributed Product hereunder (e.g. sales tax, VAT, etc.).
(g)
Any and all co-op advertising monies. During the last six (6) months of the Term of this agreement, Universal may deduct from Net Billings a reasonable reserve for any such costs incurred by Universal during such period, which reserve will be liquidated no later than twelve (12) months after the end of the Term hereof.
(h)
Universal' s standard charges for returns handling and refurbishing Distributed Product, whether such Records were distributed by Universal or by a Person other than Universal.
(i)
Universal' s standard charges for refurbishing Records manufactured by any Person other than Universal.
(j)
Credits to Universal' s customers for actual returns of Distributed Product not shipped by Universal hereunder made during each accounting period.
(k)
Special Program Discounts and/or price reduction programs.
(l)
Any other amounts due Universal under this agreement or the License Agreement or any and all other costs of any other service rendered by Universal or product furnished or monies spent by Universal on your behalf hereunder, provided any such service, product, or monies are provided or spent in the normal course of handling Distributed Product hereunder and are consistent with similar services, products or monies that are provided or spent for similar-type arrangements.
(m)
any other amounts that Universal is entitled to offset or otherwise deduct from Net Billings or Net Licensing Billings hereunder.
3.03.
Universal will compute Net Proceeds hereunder on a calendar monthly basis. Within sixty (60) days after the close of each such monthly period Universal will send you an accounting statement covering the Net Proceeds for the accounting period concerned and will remit to you the net amount of such Net Proceeds, if any, after deducting any such amount, if any, that Universal may be required to withhold pursuant to the applicable state tax laws, the U.S. Tax Regulations, or any other applicable statute, regulation, treaty, or law. Such accounting statements will be rendered in accordance with Universal' s regular accounting practices. Notwithstanding anything to the contrary contained herein, Universal, during the Exploitation Period hereof, is not obligated to render an accounting statement with respect to any monthly periods in respect of which there is no significant (as determined by Universal in its reasonable commercial judgment) change between the accounting rendered with respect to the calendar monthly period immediately preceding such
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particular calendar monthly period and the accounting that would otherwise be rendered with respect to such particular monthly period unless you request, in writing, an accounting statement for one or more particular monthly periods. Any such requests will be made at least thirty (30) days prior to the commencement of the calendar monthly period in respect of which an accounting statement is sought.
3.04.
All accounting statements rendered by Universal will be conclusively binding upon you and not subject to any objection by you for any reason unless specific objection in writing, stating the basis thereof, is given to Universal and an audit pursuant to paragraph 3.05 for that statement is completed within two (2) years from the date such statement is rendered. Failure to make such written objection or conduct the audit within said time period will be deemed to be your approval of such statement, your waiver of such audit rights, and your waiver of the right to sue Universal for additional Net Proceeds in connection with the applicable accounting period. Each statement will be deemed rendered when due unless you notify Universal that the applicable statement was not received by you and such notice is given within sixty (60) days after the applicable due date specified in paragraph 3.01 above, in whic h event the statement will be deemed rendered on the date actually sent by Universal. You will not have the right to sue Universal in connection with any accounting, or to sue Universal for monies due on account of the exploitation of Distributed Product hereunder during the period an accounting covers, unless you commence the suit within two (2) years after the date the applicable statement is rendered to you.
3.05.
You may, at your own expense, audit Universal' s books and records directly relating to this agreement that report the sales or other exploitation of Distributed Product for which Net Proceeds are payable hereunder. You may make such audit only for the purpose of verifying the accuracy of statements sent to you hereunder and only as provided herein. You may initiate such audit only by giving notice to Universal at least thirty (30) days prior to the date you intend to commence your audit. Your audit will be conducted by a reputable independent certified public accountant experienced in record industry audits in such a manner so as not to disrupt Universal's other functions and will be completed promptly. You may audit a particular statement only once and only within two (2) years after the date such statement is rendered as provided in paragraph 3.04 above. Your audit may be conducted only durin g Universal's usual business hours and at the place where it keeps the books and records to be examined. You will not audit Universal' s books and records more than once during any calendar year of the Term of this agreement. Your auditor will review his tentative written findings with a member of Universal's finance staff designated by Universal before rendering a report to you so as to remedy any factual errors and clarify any issues that may have resulted from misunderstanding.
3.06.
At any time that Net Proceeds are reported, if such Net Proceeds are in a negative amount, then you will promptly pay Universal such Net Proceeds, plus any other amounts then due.
3.08.
You acknowledge that Universal may invoice free goods in accordance with its standard policies.
4.
YOUR OBLIGATIONS
4.01
You will be solely responsible for and will accept and process any and all returns of Distributed Product not distributed by Universal, whether sold before or during the Term of this agreement, including, without limitation, returns from independent distributors, retailers, racks or otherwise. The preceding sentence is of the essence of this agreement. Without limiting the foregoing, if Universal elects, in its sole discretion, to accept and process returns of Distributed Product not distributed by Universal on your behalf (which Universal is under no obligation whatsoever to do), then, without limiting its other rights and remedies, Universal will have the right to deduct any costs incurred therefor (including Universal' s standard returns handling fees) against any and all monies otherwise payable to you hereunder or under the License Agreement, provided, however, that if the
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monies otherwise payable hereunder for any particular accounting period are less than the total amount to be deducted, Universal will bill you for such costs, and you will reimburse Universal for same no later than thirty (30) days after your receipt of Universal' s invoice.
4.02
You will be solely responsible for all costs of refurbishing inventory of Distributed Product not manufactured by Universal hereunder to allow Universal to sell such inventory as Universal-distributed product during the Term of this agreement. Such refurbishing of Distributed Product will include having all references to any prior distributor contained on Distributed Product concerned and/or any packaging in respect thereof, removed or otherwise overstickered, covered, or deleted, and, at Universal' s election, such Distributed Product will either bear a sticker or other identifying characteristic, or will bear a new selection number and bar code. Without limiting the foregoing, Universal will have the right to deduct the costs of such refurbishing (at Universal' s standard rate card refurbishing cost) from any and all monies otherwise payable to you hereunder or under the License Agreement, provided, however, that if the monies otherwise payable hereunder in any particular accounting period are less than the total amount to be deducted, then Universal will bill you for such costs, and you will reimburse Universal for same no later than thirty (30) days after your receipt of Universal' s invoice.
4.03.
You will supply Universal, pursuant to the schedule and specifications designated by Universal, material for insertion in Universal's sales publication(s), if any.
4.04.
Universal has an insurance policy that covers the manufacturing cost of any inventory while it is in Universal' s possession (including inventory of Distributed Product.) Notwithstanding the foregoing, it is understood by the parties hereto that you will bear the risk of any loss to or in connection with the inventory of Distributed Product.
4.05.
Promptly after Universal's request, you will, at your sole expense, remove from Universal's warehouse, or order the destruction of, the stock of any Surplus Records. You will be deemed to have ordered the destruction of any such Surplus Records within twenty-one (21) days after the date of Universal's request to remove same from its warehouse, unless Universal receives from you within said twenty-one (21) day period written instructions for the immediate delivery of such stock to a public warehouse or other non-Universal location at your expense. All such Surplus Records removed from Universal' s warehouse pursuant to this paragraph, if not subsequently destroyed, will be warehoused by you in a manner satisfactory to Universal to prevent the distribution, sale, or other exploitation of such stock of Distributed Product. In the alternative, if you fail to remove such stock from Universal46;s warehouse, Universal will have the right to charge you for the cost of storing such stock in Universal' s warehouse pursuant to Universal' s standard rate card prices and to deduct such costs from your Net Proceeds hereunder.
4.06.
(a)
You will be solely responsible for securing (and you agree to timely secure) any and all permissions, authorizations, clearances, licenses, releases and other rights required (or reasonably deemed necessary by Universal) to enable Universal to distribute and otherwise exploit Distributed Product in the Territory without infringing upon the rights of, or incurring any liability to, any other Persons including, without limitation, music publishers and their agents. In addition, you will be solely responsible for timely paying (and you agree to timely pay) any and all sums due or otherwise required to be paid to any and all other Persons in respect of any such permissions, authorizations, clearances, licenses, releases and other rights (including, without limitation, payments to developers, copyright proprietors, music publishers, writers, artists (including, without limitation, Distributed Artists), producers and engineers). At Universal' s request, you agree to provide Universal with written evidence (such evidence to be in a form satisfactory to Universal in its sole discretion) (i) that you have entered into written mechanical license agreements, as required, with the appropriate Persons in respect of each and every Composition embodied in Distributed Product theretofor distributed and/or otherwise exploited hereunder (and/or which is scheduled to be
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distributed and/or otherwise exploited hereunder) ("Mechanical License") and (ii) that you have accounted and paid hereunder all Mechanical Royalties due in this regard pursuant to such Mechanical License (or pursuant to the compulsory statutory provisions of the U.S. Copyright Act).
(b)
You agree to deliver each Master of Distributed Product hereunder in the form of a Digital Master. You will comply with Universal' s then-current policies with respect to Samples, and you hereby warrant and represent that all information supplied by you to Universal in that regard is and will be complete and accurate. In connection with each Master of Distributed Product delivered hereunder to Universal, you will provide Universal in written form with all necessary information, consents, licenses, and permissions, including without limitation those relating to all Samples, if any, interpolated in the Masters, such that Universal may manufacture, distribute, sell, release and otherwise exploit Records embodying the Masters concerned by any and all methods now or hereafter known, including, without limitation, lyrics to each musical composition contained on a Record, ancillary materia ls prepared by or for you which are required hereunder, mechanical licenses, sideartist permissions and any information required to be delivered to unions, guilds or other third parties. Without limiting the foregoing or any of Universal' s rights or remedies hereunder, lyrics to each musical composition contained on any Record of Distributed Product to be released hereunder must be delivered to Universal no later than ninety (90) days before the scheduled release date of the Record concerned, which lyrics shall be typed and in an easily readable form.
4.07.
(a)
You, at your sole cost and expense, will produce and deliver to Universal the Record packaging for each Record of Distributed Product hereunder (" Artwork" ). All Artwork will be in the form of film from the " camera ready" artwork comprised of uncombined color separations (free of logos, bar coding or other indicia of your prior licensees or distributors) for any jacket, sleeve, container, cover, inlay card, booklet, and insert for Records to be derived from such Record and must comply with Universal' s standard packaging format. All Artwork must be delivered to Universal not later than ninety (90) days before the scheduled release date of the Record concerned together with all licenses and consents required in connection with it and will be so delivered in the format and manner as designated by Universal in its sole discretion. If you fail to timely deliver any artwork hereunder (including, without limitation, any Artwork), then Universal will have the right to deduct any premium charges incurred by Universal to meet the release schedule of the applicable Record of Distributed Product hereunder from any and all monies otherwise payable to you hereunder or under the License Agreement, provided, however, that if the monies otherwise payable hereunder for any particular accounting period are less than the total amount to be charged, Universal will bill you for such costs, and you will reimburse Universal for same no later than thirty (30) days after your receipt of Universal' s invoice.
(b)
(1)
(A)
Without limiting the foregoing, and subject to the last sentence of paragraph 2.02 above, you, at your sole cost and expense, will have printed on the outside and elsewhere of the packaging or other graphics for each Record of Distributed Product hereunder (as and where and in the manner designated by Universal in its sole discretion) Universal' s logo as provided to you by Universal (" Universal Logo" ) and the language " Manufactured and Distributed by Universal Records, a division of UMG Recordings, Inc., 1755 Broadway, New York, New York 10019" or words of similar effect subject to the approval of Universal (" Universal Legend" ). The Universal Logo will be the same size as and will be placed either to the right of or below your Mark contained on the particular Record packaging, unless required otherwise by Universal in its sole discretion. You further a gree that Universal shall have the right to include the Universal Logo and Universal Legend on each Record hereunder (such as, by way of example only, on the " label" of any compact disc). Notwithstanding anything to the contrary contained herein, all matters relating to the Universal Logo, the Universal Legend, and Universal' s other trademarks, legal obligations, or other requirements in respect of Distributed Product, Artwork or any other materials hereunder will be determined in Universal' s sole discretion, and you agree to comply with all of Universal' s instructions in connection therewith.
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(B)
Without limiting the last sentence of paragraph 2.02 above, you will not have the right to use the Universal Logo or the Universal Legend or any other Universal Marks (as defined in paragraph 4.07(b)(2) below) in any manner connection with any Distributed Product that is not manufactured, distributed or otherwise exploited by Universal hereunder (including, without limitation, any Distributed Product not distributed or otherwise exploited by Universal pursuant to paragraph 2.02 above)
(2)
You agree that Universal shall retain all right, title and interest in and to the Universal Logo and in any other trademark, trade name, service mark or logo owned and/or controlled by Universal (" Universal Marks" ) and all associated goodwill and intellectual property rights (including, without limitation, any copyright, design, trade name, trademarks, trade dress, or other property right). Nothing contained in this agreement confers to you any right of ownership in the Universal Logo or the Universal Marks or any interest in the goodwill and intellectual property rights associated therewith other than the right to use the Universal Logo in accordance with this agreement. When using the Universal Logo, you will follow Universal' s trademark guidelines as provided to you by Universal from time to time. You agree not to register, or attempt to register, or to oth erwise assert any rights in, the Universal Logo and/or the Universal Marks in any manner (including, without limitation, as a trademark, trade name, service mark, or Internet domain name) in any jurisdiction or otherwise. Neither the Universal Logo nor any of the Universal Marks will be used by you in any manner without Universal's express prior written consent in each instance except as specifically permitted in this agreement. Universal (in its absolute and sole discretion) may require that you use the Universal Logo or any Universal Mark (as applicable) in connection with Universal approved marketing materials and advertisements related to Distributed Product hereunder. You shall not have the right to alter the appearance of the Universal Logo and/or the Universal Marks in any manner. You will not use, cause, or authorize to be used, as your Mark or otherwise, any word, device, design, slogan, trade name, trademark, service mark, logo, or symbol confusingly similar to the Universal Logo and/or to any of the Universal Marks. You right to use the Universal Logo as expressly provided in this agreement will automatically end upon the expiration or termination of this agreement. Without limiting any of the provisions contained herein, the provisions of this paragraph 4.07(b)(2) will survive the expiration or termination of this agreement.
(3)
You will only use your Mark and the Universal Logo (subject to Universal' s prior approval and subject to the other applicable provisions contained herein) in connection with Distributed Product hereunder (including, without limitation, in any Artwork hereunder and in any marketing and promotional materials and/or advertising related to the exploitation of Distributed Product), and, without limiting the foregoing, you will not have the right to use in any manner the logo, trademark, trade name, service mark, or logo of any other Person in connection with any of the foregoing.
(c)
If Universal determines in its sole discretion that any Distributed Product must be identified as containing " explicit contents" then you agree at your sole cost and expense to include the R.I.A.A. " Parental Advisory Logo" on the front outside Record packaging artwork of the applicable Distributed Product in the size, manner, and placement as designated by Universal in its sole discretion and on all materials related to the particular Distributed Product (e.g., without limitation, advertising, promotional, and marketing materials). If you fail to so include the " Parental Advisory Logo" on any Record packaging artwork or other materials hereunder, then Universal, without limiting its other rights, will have the right to (1) decline to distribute or cease the distribution of the applicable Distributed Product; and/or (2) include, at your sole cost and expense, the " Parental Advisory Logo" on such Record packaging artwork and other materials. If Universal exercises the foregoing option (2), Universal will have the right to deduct al costs in connection therewith from any and all monies otherwise payable to you hereunder or under the License Agreement, provided, however, that if the monies otherwise payable hereunder in any particular accounting period are less
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than the total amount to be deducted, then Universal will bill you for such costs, and you will reimburse Universal for same no later than thirty (30) days after your receipt of Universal' s invoice.
(d)
Notwithstanding anything to the contrary contained herein, Universal will have th...
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