Entertainment

Table of Contents

• Directly-Related Test
• Associated Test
  • Meetings at conventions.
• 50% Limit
  • Exceptions to the 50% Limit
• What Entertainment Expenses Are Deductible?
  • A meal as a form of entertainment.
  • Deduction may depend on your type of business.
  • Exception for events that benefit charitable organizations.
  • Food and beverages in skybox seats.
• What Entertainment Expenses Are Not Deductible?
  • Out-of-pocket expenses.

You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. The rules and definitions are summarized in Table 2-1.

You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests.

• Directly-related test.
• Associated test.

Both of these tests are explained later.

An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary.

The amount you can deduct for entertainment expenses may be limited. Generally, you can deduct only 50% of your unreimbursed entertainment expenses. This limit is discussed later under 50% Limit.

Directly-Related Test

To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that:

• The main purpose of the combined business and entertainment was the active conduct of business,
• You did engage in business with the person during the entertainment period, and
• You had more than a general expectation of getting income or some other specific business benefit at some future time.

Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter.

You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. It is not necessary to devote more time to business than to entertainment. However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test.

Table 2-1 When Are Entertainment Expenses Deductible?

General rule	You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test.
Definitions	Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. An ordinary expense is one that is common and accepted in your field of business, trade, or profession. A necessary expense is one that is helpful and appropriate,
Tests to be met	Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit.
	Associated test Entertainment is associated with your trade or business, and Entertainment directly precedes or follows a substantial business discussion.
Other rules	You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. You cannot deduct expenses that are lavish or extravagant under the circumstances. You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit).

You do not have to show that business income or other business benefit actually resulted from each entertainment expense.

Clear business setting.   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. The following situations are examples of entertainment in a clear business setting.

• Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products.
• Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer).
• Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained.

Expenses not considered directly related.   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. The following are examples of situations where there are substantial distractions.

• A meeting or discussion at a nightclub, theater, or sporting event.
• A meeting or discussion during what is essentially a social gathering, such as a cocktail party.
• A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts.

Associated Test

Even if your expenses do not meet the directly-related test, they may meet the associated test.

To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is:

• Associated with the active conduct of your trade or business, and
• Directly before or after a substantial business discussion (defined later).

Associated with trade or business.   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. The purpose may be to get new business or to encourage the continuation of an existing business relationship.

Substantial business discussion.   Whether a business discussion is substantial depends on the facts of each case. A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit.

  The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. It is not necessary that you devote more time to business than to entertainment. You do not have to discuss business during the meal or entertainment.

Meetings at conventions.   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. However, your reason for attending the convention or meeting must be to further your trade or business. The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting.

Directly before or after business discussion.   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion.

  If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. Among the facts to consider are the place, date, and duration of the business discussion. If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day.

Example.

A group of business associates comes from out of town to your place of business to hold a substantial business discussion. If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. The expense meets the associated test.

50% Limit

In general, you can deduct only 50% of your business-related meal and entertainment expenses. (If you are subject to the Department of Transportation's "hours of service" limits, you can deduct a higher percentage. See Individuals subject to "hours of service" limits, later.)

The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed.

Figure A summarizes the general rules explained in this section.

The 50% limit applies to business meals or entertainment expenses you have while:

• Traveling away from home (whether eating alone or with others) on business,
• Entertaining customers at your place of business, a restaurant, or other location, or
• Attending a business convention or reception, business meeting, or business luncheon at a club.

Included expenses.   Expenses subject to the 50% limit include:

• Taxes and tips relating to a business meal or entertainment activity,
• Cover charges for admission to a nightclub,
• Rent paid for a room in which you hold a dinner or cocktail party, and
• Amounts paid for parking at a sports arena.

However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit.

Please click here for the text description of the image.

Figure A. Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions

Application of 50% limit.   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later.

  The 50% limit also applies to certain meal and entertainment expenses that are not business related. It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. It also applies to the cost of meals included in deductible educational expenses.

When to apply the 50% limit.   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication.

Example 1.

You spend $200 for a business-related meal. If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Your deduction cannot be more than $45 (50% × $90).

Example 2.

You purchase two tickets to a concert and give them to a client. You purchased the tickets through a ticket agent. You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Your deduction cannot be more than $80 (50% × $160).

Exceptions to the 50% Limit

Generally, business-related meal and entertainment expenses are subject to the 50% limit. Figure A can help you determine if the 50% limit applies to you.

Expenses not subject to 50% limit.   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions.

1 - Employee's reimbursed expenses.   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Accountable plans are discussed in chapter 6.

2 - Self-employed.   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met.

• You have these expenses as an independent contractor.
• Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform.
• You provide adequate records of these expenses to your customer or client. (See chapter 5.)

  In this case, your client or customer is subject to the 50% limit on the expenses.

Example.

You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. If the client can deduct the expenses, the client is subject to the 50% limit.

If you (the contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit.

3 - Advertising expenses.   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit.

4 - Sale of meals or entertainment.   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit.

5 - Charitable sports event.   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later.

Individuals subject to "hours of service" limits.   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's "hours of service" limits. The percentage is 75% for 2007.

  Individuals subject to the Department of Transportation's "hours of service" limits include the following persons.

• Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations.
• Interstate truck operators and bus drivers who are under Department of Transportation regulations.
• Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations.
• Certain merchant mariners who are under Coast Guard regulations.

What Entertainment Expenses Are Deductible?

This section explains different types of entertainment expenses that you may be able to deduct.

Entertainment.   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips.

  Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families.

A meal as a form of entertainment.   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. A meal expense includes the cost of food, beverages, taxes, and tips for the meal. To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided.

  

You cannot claim the cost of your meal both as an entertainment expense and as a travel expense.

  

Meals sold in the normal course of your business are not considered entertainment.

Deduction may depend on your type of business.   Your kind of business may determine if a particular activity is considered entertainment. For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. This is because fashion shows are typical in your business. But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment.

Separating costs.   If you have one expense that includes the costs of entertainment, and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. You must have a reasonable basis for making this allocation. For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge.

Taking turns paying for meals or entertainment.   If a group of business acquaintances take turns picking up each others' meal or entertainment checks without regard to whether any business purposes are served, no member of the group can deduct any part of the expense.

Lavish or extravagant expenses.   You cannot deduct expenses for entertainment that are lavish or extravagant. An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts.

Allocating between business and nonbusiness.   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. You can deduct only the business part. If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis.

Example.

You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. Only 4/11 of the expense qualifies as a business entertainment expense. You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses.

Trade association meetings.   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations.

Entertainment tickets.   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers.

Exception for events that benefit charitable organizations.   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply.

• The event's main purpose is to benefit a qualified charitable organization.
• The entire net proceeds go to the charity.
• The event uses volunteers to perform substantially all the event's work.

  

The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event.

Example 1.

You purchase tickets to a golf tournament organized by the local volunteer fire company. All net proceeds will be used to buy new fire equipment. The volunteers will run the tournament. You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense.

Example 2.

You purchase tickets to a college football game through a ticket broker. After having a business discussion, you take a client to the game. Net proceeds from the game go to colleges that qualify as charitable organizations. However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction.

Skyboxes and other private luxury boxes.   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket.

  To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. For example, renting a skybox for a series of playoff games is considered renting it for more than one event. All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination.

  Related parties include:

• Family members (spouses, ancestors, and lineal descendants),
• Parties who have made a reciprocal arrangement involving the sharing of skyboxes,
• Related corporations,
• A partnership and its principal partners, and
• A corporation and a partnership with common ownership.

Example.

You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. The cost of regular nonluxury box seats at each event is $30 a seat. You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events).

Food and beverages in skybox seats.   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. The amounts separately stated for food and beverages must be reasonable. You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals.

What Entertainment Expenses Are Not Deductible?

This section explains different types of entertainment expenses that you generally may not be able to deduct.

Club dues and membership fees.   You cannot deduct dues (including initiation fees) for membership in any club organized for:

• Business,
• Pleasure,
• Recreation, or
• Other social purpose.

This rule applies to any membership organization if one of its principal purposes is either:

• To conduct entertainment activities for members or their guests, or
• To provide members or their guests with access to entertainment facilities, discussed later.

  The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You cannot deduct dues paid to:

• Country clubs,
• Golf and athletic clubs,
• Airline clubs,
• Hotel clubs, and
• Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions.

Entertainment facilities.   Generally, you cannot deduct any expense for the use of an entertainment facility. This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection.

  An entertainment facility is any property you own, rent, or use for entertainment. Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort.

Out-of-pocket expenses.   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. These are not expenses for the use of an entertainment facility. However, these expenses are subject to the directly-related and associated tests and to the 50% limit, all discussed earlier.

Expenses for spouses.   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. However, you can deduct these costs if you can show that you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment.

Example.

You entertain a customer. The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. The customer's spouse joins you because it is impractical to entertain the customer without the spouse. You can deduct the cost of entertaining the customer's spouse. If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible.

Gift or entertainment.   Any item that might be considered either a gift or entertainment generally will be considered entertainment. However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift.

  If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. You can treat the tickets as either a gift or entertainment, whichever is to your advantage.

  You can change your treatment of the tickets at a later date by filing an amended return. Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later.

  If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. You cannot choose, in this case, to treat the tickets as a gift.

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How To Start A Music Publishing Company

STARTING YOUR MUSIC PUBLISHING COMPANY

 

Starting your own publishing company is actually not that hard.  You as a songwriter may truly benefit from setting up your "own" publishing company because not only will you be able show off your own catalog of songs you've written - but also you may exploit songs of other writers that you acquire material from.  You will also be able to collect your money from mechanical and performance licenses direct. (Opposed to getting your money through another publisher).

 

Step 1

 

First of all - you will need to think up a few really 'you-neek' names for your company.  I suggest trying as many combinations of words & "new" words as you can possibly think of (that you like).  BMI and ASCAP, including local government business databanks already have many of the most common names taken. So like I said - be unique.  Many big name artists sometimes can't use their established artist names because they are too close to other names that already exist. So with this being a reality - many recording artists spell their "known" names backwards. For example: ECAF Music for Babyface or ECNIRP Music for Prince.

 

Step 2

 

You will need to join a performance rights organization such as BMI, ASCAP or SESAC.  Get in touch with these organizations to request the necessary information and application to join as a writer and publisher.  Your company can only be an "active" member of one. There is a fee.

 

BMI 

 

Atlanta

3340 Peachtree Rd. NE

Suite 570

Atlanta, GA 30326

(404) 261-5151

 

Los Angeles

8730 Sunset Blvd. 3rd Floor West

West Hollywood, CA 90069-2211

(310) 659-9109

 

Nashville

10 Music Square East

Nashville, TN 37203

(615) 401-2000

 

New York

320 West 57th Street

New York, NY 10019-3790

(212) 586-2000

 

 

ASCAP

1- 800-95-ASCAP

 

ATLANTA

PMB 400

541 Tenth Street NW

Atlanta, GA 30318

Tel: (404) 351-1224

 

NASHVILLE

Two Music Square West

Nashville, TN 37203

Tel: (615) 742-5000

 

NEW YORK

One Lincoln Plaza

New York, NY 10023

Tel: (212) 621-6000

 

LOS ANGELES

7920 W. Sunset Boulevard, 3rd Fl.

Los Angeles, CA 90046

Tel: (323) 883-1000

 

 

SESAC

 

NASHVILLE

55 Music Square East

Nashville, TN 37203

615-320-0055

 

NY

152 West 57th ST - 57th Floor

New York, NY 10019

212-586-3450

 

LA

501 Santa Monica Blvd - Suite 450

Santa Monica, CA 90401-2430

310-393-9671

 

Step 3

 

Now you must get your company set up with the local city / county / state government to get a business license / permit to do business as a music publisher.  You will need to decide in which business manner to file your company - Sole Proprietor - General Partnership - Corporation - D.B.A. (Doing Business As), etc.  You will also need a Federal Tax ID to complete your applications to BMI, ASCAP or SESAC.

 

Great sources for business license & tax id info:

 

www.allbusiness.com

 

www.sbaonline.sba.gov

 

www.irs.gov

 

Step 4

 

Open up a Business Bank Account.  If you've followed the steps above, and your credit is not TOTALLY ruined... bad checks, etc. - you should have no problem opening an account.  And even if your credit is bad... there are still ways to do this. 

 

Step 5

 

Contact The Harry Fox Agency to request information and an application to join. This is so they can issue mechanical & digital licenses to collect money in your behalf - from the sales of your songs.  They also can perform audits when considered necessary.

  

THE HARRY FOX AGENCY, INC

711 THIRD AVENUE

NEW YORK, NY 10017 

(212) 370-5330

 

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SAMPLE CONTRACT

This contract between YOUR RECORD COMPANY's NAME HERE hereinafter referred to as the "Agreement") executed and effective this _______ day of ___________, 20___, by and between ___________________(Artist) (hereinafter referred to as the "Artist") and _________________________(Company) (hereinafter referred to as the "Company"):
 

IT IS HEREBY UNDERSTOOD

a. Company is an organization, which specializes in the management, recording, recording distribution and representation of musical artists;

b. Company is familiar with the musical abilities of Artist and has the expertise, ability, industry contacts and resources to assist Artist in the furtherance of his/her career.

c. Artist performs under the name "(Artist's Stage Name)";

d. Company and Artist wish to enter into this Agreement to provide for the production and distribution of the Recording.

IT IS, THEREFORE, AGREED AS FOLLOWS:

A. TERM. The effectiveness of this Agreement shall commence with its execution by all of the parties, and shall continue thereafter for a period of _________ (#) years.

B. PRODUCTION OF RECORDING. The Recording shall be produced in the following manner:

1. PRODUCTION. Company agrees to produce one master recording consisting of songs written and performed by Artist (hereinafter referred to as the "Songs". The resulting recording (hereinafter referred to as the "Recording") shall include music of not less than forty (40) minutes in playing duration, and shall be of a quality which is equal to master recordings normally produced for commercial distribution.

2. CONTRIBUTION BY ARTIST. Artist agrees to full cooperate with the Company, in good faith, in the production of the Recording; to contribute to such production the music and lyrics embodied in the Songs; to arrange, direct and perform the Songs in such a manner as to facilitate the production of the Recording; and to otherwise strictly observe the remaining duties and obligations of this Agreement.

3. COSTS. Company shall be responsible for all costs incurred in the production of the Recording, including the prepayment of all travel, hotel and meal costs incurred by Artist in attending the recording sessions referenced in Section B.5 herein. Company may recover such receipted expenses pursuant to the production of master recordings or the advancement of the Artist's career. Company's production, promotion, manufacturing and all other bonafide expenses relating to Artist are deemed recoupable from gross income.

4. ARTISTIC CONTROL. Company and Artist shall be jointly responsible for all decisions regarding the artistic content of the Recording.

5. DATES AND LOCATION OF RECORDING SESSIONS. The recording sessions necessary to produce the Recording shall occur at studios and facilities chosen by Company in _____________(city) _________________(State), commencing on ____________, 20___ and ending on ____________, 20___.

6. ADDITIONAL MUSICIANS. Company shall provide and compensate sufficient and competent musicians to properly perform the Songs, as arranged and directed by Artist and Producer. Company may recover such costs pursuant to Section B3. herein.

7. TITLE. The title of the Recording shall be chosen by agreement between the Company and the Artist.

8. COMPLETION AND RELEASE. The Recording shall be completed and prepared for release and distribution on or before ___________, 20____. Company and Artist acknowledge that time is of the essence in the completion of the Recording, and each agree to exercise all reasonable means to achieve such completion.

9. ASSIGNMENT OF EXCLUSIVE RIGHTS BY ARTIST. Upon the timely occurrence and performance of all material events and obligations required to produce the Recording, Artist shall assign to the Company all of his/her rights, title, and interest in and to the following property, for distribution and commercial exploitation in the United States and Canada:

a. The Songs,

b. Artist's performance of the Songs contained in the Recording,

c. The title of the Recording.

 

10. LICENSE FOR USE OF NAME AND IMAGE. Upon the timely occurrence and performance of all material events and obligations required to produce the Recording, Artist shall grant to the Company the exclusive license to use the name " ____________________(Artist)__", and the Artist's photographic image, in the promotion and distribution of the Recording.

 

11. FORM OF ASSIGNMENT AND LICENSE DOCUMENTS. The form of documents to be executed by Artist, pursuant to Section C. and D. herein shall be identical to the "Assignments" and "License" respectively attached hereto as Exhibits "C" and "D", and incorporated herein by this reference.

 

12. COPYRIGHT. Upon Artist's assignment of the Songs pursuant to Section C. herein, Company shall proceed to obtain and secure a copyright for each of the said Songs. Each such

copyright shall be the sole property of the Company.

 

13. DISTRIBUTION. Commencing with the completion of the Recording and continuing for the term of this Agreement, Company will diligently use its best efforts to secure distribution of the Recording throughout the world, through one or more major distribution companies (including record companies, film companies, or any other company). Any such contract entered into between Company and any such record distribution company shall be subject to the terms of this Agreement.

 

14. ROYALTIES. In accordance with the rights granted by Artist to Company herein,

Company intends to contract with a record distribution company for distribution of the Recording. Company will be entitled to receive royalties or licensing fees (herein collectively referred

to as the "Royalties") as a result of such contract. Royalties shall include any compensation received by Company, or promised to Company, which directly or indirectly results from the use,

exploitation or existence of the Recording, or any reproduction applied to satisfy costs incurred and paid by Company pursuant to Sections B.3,and B.6, herein. In the event that Royalties

are insufficient to complete such reimbursement, Artist shall not be liable for such costs. The remainder of such Royalties, if any, shall be allocated and distributed between Company and

Artist, in the following proportion:

__________________________________ ( %) Percent to Company

__________________________________ ( %) Percent to Artist

Royalties due Artist hereunder shall be delivered by Company to Artist within fifteen working days from the Company's receipt thereof.

 

15. B.M.I. MEMBERSHIP. Within a reasonable time after the execution of this Agreement, Artist shall apply for registration and membership with Broadcast Music Inc. (BMI), a music licensing organization. Company shall be responsible for any cost or expense associated with such application or with the Artist's membership in BMI during the term of this Agreement and the Distribution Period. Company may recover such costs pursuant to Section B#. herein.

 

16. NON-CIRCUMVENTION. Artist shall not detrimentally interfere with the efforts of Company to distribute the Recording through one or more distribution companies or enter into any contract inconsistent with the rights of distribution assigned to Company hereunder. Artist shall not contact any such potential distribution company except through the offices of the Company.

 

17. ADDITIONAL PERSONAL SERVICES. For the term of this Agreement, Artist agrees to appear at one or more performances to promote the distribution of the Recording. Company shall schedule and arrange such performances, but Artist shall have the right of prior approval of the location, date and time of each such performance. The total number of performances during the term of this Agreement shall not exceed ___________________. Company shall be responsible for travel, hotel and meal costs incurred by Artist in attending each such performance, Artist shall be paid one-half (1/2) of the net revenues received by Company for such performances. Such compensation shall be received by Artist within fifteen (15) days from Company's receipt thereof. Company may recover such costs (including travel costs and compensation paid to Artist) pursuant to Section B3. herein.

 

18. OPTION TO PURCHASE. At any time during the term of this Agreement or thereafter, at Artist's option, Artist may purchase all rights assigned and/or granted to Company hereunder or resulting to Company herefrom (including rights of copyright to any and all of the Songs) for the total sum of:

a. ___________________________, plus;

b. Any receipted costs expended by Company hereunder, but reimbursed, as of the date of exercise of such option to purchase, plus;

c. _______ Percent ( %) of the gross revenues generated thereafter from the Recording.

Exercise of the option shall be accomplished by the delivery of such amount, in cash or certified funds, to Company or its express designee. In the event of such exercise, Company shall promptly execute all documents reasonably necessary to effectuate such transaction. If and upon the exercise of such option, the obligations undertaken by the parties herein shall be exercised.

 

19. ASSIGNMENT BY COMPANY. Prior to completion of the Recording, the rights and obligations of the Company existing hereunder are personal and unique, and shall not be assigned without the prior written consent of Artist. Subsequent to the completion of the Recording, Company may assign its rights and obligations existing hereunder without the consent of Artist.

 

20. ASSIGNMENT BY ARTIST. The rights and obligations of Artist existing hereunder are personal and unique, and shall not be assigned without prior written consent of Company,

 

21. CONDITION SUBSEQUENT. If Company does not enter into a binding contract for the distribution of the Recording during the Distribution Period, the assignment and license from Artist to Company granted pursuant to Sections C. and D. hereunder shall be deemed rescinded by the agreement of the parties.

 

22. RIGHT OF INSPECTION. At any time during the term of this Agreement upon prior written notice to Company of at least seven (7) days, Artist or his/her designated representative shall be permitted unrestricted access to the books and records of Company which in any way pertain to Artist, for inspection and photocopying by Artist or Artist's designated representative.

Such books and records shall include, but shall not be limited to, any documents or records which evidence the receipt or disbursements of Royalties. Company shall maintain such books and records at its principal office.

23. MISCELLANEOUS.

a) BINDING EFFECT. This Agreement shall be binding upon the successors and assigns of the parties.

b) ARBITRATION. In the event of a dispute between Company and Artist regarding the terms, construction or performance of this Agreement, such dispute shall be settled by binding arbitration in ______________(city, state)________________, according to the rules of the American Arbitration Association for the settlement of commercial disputes, then in effect.The award or decision resulting therefrom shall be subject to immediate enforcement in a _________________(state) court of competent jurisdiction.

c) JURISDICTION/APPLICABLE LAW. Company and Artist hereby submit to the jurisdiction of the courts of _________________(state) for the enforcement of this Agreement or any arbitration award or decision arising herefrom. This Agreement shall be enforced or construed according to the laws of the State of ___________.

d) ATTORNEY'S FEES. In the event that a party is forced to obtain an attorney to enforce the terms of this Agreement, the party prevailing in such action of enforcement shall be entitled to the recovery of attorney's fees incurred in such action.

e) COVENANT OF GOOD FAITH AND FAIR DEALING. Company and Artist agree to perform their obligations under this Agreement, in all respects, in good faith.

f) INDEPENDENT CONTRACTOR. In the performance of his/her obligations of this Agreement, Artist shall be deemed an independent contractor.

g) INCORPORATION OF RECITALS. The recitals contained at the beginning of this Agreement are incorporated herein by this reference

24. NOTICES. Any notices or delivery required herein shall be deemed completed when hand-delivered, delivered by agent,or placed in the U.S. Mail, postage prepaid, to the parties at the addresses listed herein.

THE PARTIES AGREE to the terms and obligations and so execute on the day and date first above mentioned.

 

______________________________
Artist Company

 

______________________________
Company

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