Residual Rights Agreement

RESIDUAL RIGHTS AGREEMENT

This Residual Rights Agreement (the "Agreement") is made and entered into as of Effective Date: by and between Assignor Name: with principal place of business at , and Assignee Name: with principal place of business at .

RECITALS

WHEREAS, Assignor is the lawful owner or licensee of certain Works and related income streams, including but not limited to royalties, residuals, backend payments, and other contingent revenues (collectively, the "Residuals") arising from the exploitation of the Works; and

WHEREAS, Assignee desires to acquire, and Assignor desires to assign, certain residual rights in and to the Residuals on the terms and conditions set forth in this Agreement; and

WHEREAS, the parties intend that the grant and payment obligations set forth herein be binding and enforceable and that the allocation of rights and obligations be clearly documented.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms have the meanings set forth below:

1.1 "Works" means the works, recordings, compositions, programs, products or other materials identified in the description below and any derivative works, revisions, or compilations thereof.

1.2 "Residuals" means all royalties, backend payments, per-use payments, residual fees, continuing consideration or other contingent or recurring revenue streams derived from the exploitation, distribution, sublicensing or sale of the Works, whether monetary or in-kind.

1.3 "Net Revenues" means gross amounts actually received by Assignor in respect of Residuals, less only customary and documented third-party deductions (such as third-party royalties, distribution fees, and applicable taxes) expressly permitted by this Agreement.

2. DESCRIPTION OF WORKS AND SCOPE

2.1 Subject to the terms and conditions of this Agreement, Assignor hereby assigns, transfers and conveys to Assignee a continuing right to receive the Residuals attributable to the Works as set forth herein. The grant shall be: and shall apply in the Territory: .

3. CONSIDERATION AND PAYMENT

3.1 Consideration. In consideration of the assignment in Section 2, Assignee shall pay to Assignor or Assignor shall pay to Assignee (as specified below) the Residual Percentage of Net Revenues: percent (the "Residual Percentage").

3.2 Payment Frequency. Payments of Residuals shall be made , with the first payment due for the period beginning . Each payment shall be accompanied by a statement reporting Net Revenues and the calculation of amounts due.

4. ACCOUNTING AND AUDIT RIGHTS

4.1 Statements. Assignor shall deliver to Assignee written statements accompanying each payment showing gross amounts, permitted deductions, Net Revenues and the resulting Residuals. Such statements shall be complete, accurate and prepared in good faith in accordance with customary industry practice.

4.2 Audit. For a period of three (3) years following the end of each accounting period, the party receiving payments shall keep accurate books and records relating to the computation and payment of Residuals. The other party shall have the right to inspect and audit such records upon no less than thirty (30) days' prior written notice during normal business hours, not more than once per calendar year, and subject to confidentiality protections set forth herein. Any underpayment revealed by an audit shall be promptly paid, together with interest at a rate of one percent (1%) per month until paid. If such audit reveals an underpayment of more than five percent (5%) of the amount that was paid, the audited party shall reimburse the auditing party's reasonable audit costs.

5. REPRESENTATIONS AND WARRANTIES

5.1 Assignor represents and warrants that: (a) Assignor is the sole legal and beneficial owner (or has valid authority to assign) the rights being assigned hereunder; (b) the assignment of Residuals will not violate any agreement, order or obligation of Assignor; (c) there are no pending claims or encumbrances that would materially impair the rights assigned to Assignee; and (d) Assignor has full corporate or individual power and authority to enter into and perform this Agreement.

5.2 Assignee represents and warrants that it has the requisite authority to accept the assignment and to perform its payment and reporting obligations under this Agreement.

6. CONFIDENTIALITY

Each party shall keep confidential the terms of this Agreement and all non-public accounting and payment information disclosed in connection with the administration of Residuals, except as necessary to enforce this Agreement or as required by law, regulation or professional advisors bound by confidentiality obligations.

7. INDEMNIFICATION

Assignor shall indemnify, defend and hold harmless Assignee from and against any and all losses, liabilities, damages, costs and expenses (including reasonable attorneys' fees) arising out of any third-party claim that the assignment of Residuals infringes or violates any third-party right or arises from a breach of Assignor's representations and warranties. Assignee shall indemnify Assignor for any claims arising from Assignee's failure to make timely payments under this Agreement.

8. TERM, TERMINATION AND SURVIVAL

8.1 Term. This Agreement shall commence on the Effective Date and shall continue unless earlier terminated as provided herein.

8.2 Termination. Either party may terminate this Agreement upon material breach by the other party that remains uncured for following written notice. Termination shall not relieve any party of obligations to account for or pay Residuals accrued prior to the effective date of termination.

8.3 Survival. Provisions that by their nature survive termination or expiration of this Agreement shall survive, including but not limited to Sections 3 (Consideration and Payment), 4 (Accounting and Audit Rights), 5 (Representations and Warranties), 6 (Confidentiality), 7 (Indemnification), 9 (Governing Law), 10 (Entire Agreement) and 11 (Severability).

9. NOTICES

All notices, statements and other communications required or permitted under this Agreement shall be in writing and delivered to the addresses set forth below (or to such other address as a party designates by notice).

10. GOVERNING LAW; DISPUTE RESOLUTION

This Agreement shall be governed by and construed in accordance with the laws of the jurisdiction of without regard to conflict of law principles. The parties agree that any dispute arising out of or relating to this Agreement shall be resolved by the courts of such jurisdiction, subject to the parties' right to seek injunctive relief to prevent irreparable harm.

11. ENTIRE AGREEMENT; AMENDMENT; SEVERABILITY; WAIVER; COUNTERPARTS

11.1 Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written.

11.2 Amendment. No amendment or modification of this Agreement shall be effective unless set forth in a written instrument signed by both parties.

11.3 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable, such provision shall be enforced to the fullest extent permitted and the remaining provisions shall remain in full force and effect.

11.4 Waiver. No failure or delay by either party in exercising any right hereunder shall operate as a waiver of that right.

11.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Facsimile or electronic signatures shall be deemed original for all purposes.

SIGNATURES

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