JS 44C/SDNY

REV. 4/2014

JUDGE SCHOFIELD

CIVIL COVERS

T4 CV

The JS-44 civilcover sheet and the infoimation contained hereinnomfcer

flMfcer mfmce
i^Hace nor
nor'SrffpplSnent
SBppllmei the filing
pleadings or other papers as required by law, except as provided by local rules of court. This form, apprr

rvJUf faf \J

Judicial Conference of the United States inSeptember 1974, is requiredfor use of the Clerkof Courtfoj

VOV.1 720U

initiating the civil docket sheet.

PLAINTIFFS

Frank M. Sullivan,

DEFENDANTS

I p/k/a Survivor, and James Peterik

Sony Music Entertainment

ATTORNEYS (FIRM NAME, ADDRESS, AND TELEPHONE NUMBER

Dunnegan & Scileppi LLC, 350 Fifth Avenue, Suite 4908, New York,

ATTORNEYS (IF KNOWN)

New York, 10118, 212-332-8300

CAUSE OF ACTION (CITE THE U.S. CIVIL STATUTE UNDER WHICH YOU ARE FILING AND WRITE ABRIEF STATEMENT OF CAUSE}
(DO NOT CITE JURISDICTIONAL STATUTES UNLESS DIVERSITY)

28 U.S.C. 1332; breach of contract and declaratory judgment

Has this action, case, or proceeding, or one essentially the same been previously filed in SDNY at any time? NaZresQudge Previously Assigned
If yes, wasthis case Vol.Qlnvol.

Dismissed. No

Yes

No 0

Yes

IS THIS AN INTERNATIONAL ARBITRATION CASE?

(PLACEAN[x] INONEBOXONLY)

If yes,give date

NATURE OF SUIT

TORTS

CONTRACT

&Case No.

ACTIONS UNDER STATUTES

PERSONAL INJURY

PERSONAL INJURY

FORFEITURE/PENALTY

BANKRUPTCY

OTHER STATUTES

[ ] 422 APPEAL

[J 400 STATE

[ ] 367 HEALTHCARE

t ] 110
M120
[]130
I] 140
[]150

[ 3151
[]152

INSURANCE
MARINE
MILLER ACT
NEGOTIABLE
INSTRUMENT
RECOVERY OF

SLANDER

[ ] 330 FEDERAL
EMPLOYERS'

ENFORCEMENT
OF JUDGMENT
MEDICARE ACT

LIABILITY

[ ] 340 MARINE
[ ] 345 MARINE PRODUCT

RECOVERY OF

LIABILITY

(EXCL VETERANS)
RECOVERY OF
OVERPAYMENT

OF VETERAN'S
BENEFITS

[]160

LIABILITY

[ ] 320 ASSAULT, LIBELS

OVERPAYMENT &

DEFAULTED
STUDENT LOANS

[]153

[ ] 310 AIRPLANE
[ ] 315 AIRPLANE PRODUCT

[ ] 350 MOTOR VEHICLE

[ ] 355 MOTOR VEHICLE

PHARMACEUTICAL PERSONAL r , 625 DRUG RELATED

INJURY/PRODUCT LIABILITY

[ ] 365 PERSONAL INJURY

PRODUCT LIABILITY

[ ] 368 ASBESTOS PERSONAL

OTHER
CONTRACT
CONTRACT
PRODUCT

REAL PROPERTY

[]210
[ ]220
[ ]230

LAND

CONDEMNATION
FORECLOSURE
RENT LEASE &
EJECTMENT

[]240
[]245

TORTS TO LAND
TORT PRODUCT

[ ]290

ALL OTHER
REAL PROPERTY

LIABILITY

28 USC 157

REAPPORTIONMENT

PROPERTY RIGHTS

[ ] 430 BANKS & BANKING

[ ] 470 RACKETEER INFLU-

ENCED &CORRUPT
[ ] 820 COPYRIGHTS
[ ]830 PATENT
[ ] 840 TRADEMARK

PERSONAL PROPERTY

[ ] 370 OTHER FRAUD

[ ] 371 TRUTH IN LENDING

INJURY

SOCIAL SECURITY

[ ] 362 PERSONAL INJURY MED MALPRACTICE

[ ] 380 OTHER PERSONAL

LABOR

PROPERTY DAMAGE

[ ] 385 PROPERTY DAMAGE

[ ] 710 FAIR LABOR

PRODUCT LIABILITY

STANDARDS ACT

[ ] 720 LABOR/MGMT
PRISONER PETITIONS

[ ] 463 ALIEN DETAINEE

[ J 510 MOTIONS TO
ACTIONS UNDER STATUTES
CIVIL RIGHTS

[ ] 440 OTHER CIVIL RIGHTS

(Non-Prisoner)
[ ] 441 VOTING
[ ] 442 EMPLOYMENT
[ ] 443 HOUSING/
ACCOMMODATIONS

[ ] 445 AMERICANS WITH

DISABILITIES EMPLOYMENT

VACATE SENTENCE
28 USC 2255

[ ] 530 HABEAS CORPUS

[ ] 535 DEATH PENALTY
[ ] 540 MANDAMUS & OTHER

]861 HIA(1395ff)
] 862 BLACK LUNG (923)
] 863 DIWC/DIWW (405(g))
] 864 SSID TITLE XVI
] 865 RSI (405(g))

[ ] 751 FAMILY MEDICAL

LEAVE ACT (FMLA)
[ ] 790 OTHER LABOR
LITIGATION

[ ] 791 EMPL RET INC

SECURITY ACT

PRISONER CIVIL RIGHTS

[ ] 462 NATURALIZATION
APPLICATION

[ ] 465 OTHER IMMIGRATION

[ ] 850 SECURITIES/
COMMODITIES/
EXCHANGE

[ ] 890OTHER STATUTORY
ACTIONS

[ ] 891 AGRICULTURAL ACTS

[ ] 893 ENVIRONMENTAL
MATTERS

[ ] 895 FREEDOM OF

26 USC 7609

INFORMATION ACT

[ ] 896 ARBITRATION
[ ] 899 ADMINISTRATIVE
PROCEDURE ACT/REVIEWOR
APPEAL OF AGENCY DECISION

[ ] 950 CONSTITUTIONALITY OF
STATE STATUTES

ACTIONS

CONDITIONS OF CONFINEMENT

[ ] 446 AMERICANS WITH

DISABILITIES-OTHER

[ ] 448 EDUCATION

Check ifdemanded in complaint:

CHECK IF THIS IS ACLASS ACTION

UNDER F.R.C.P. 23

DEMAND $> $75,000.00 0THER

fF0S00^V^M IS CASE 'S RELATED TO ACIVIL CASE NOW PENDING IN S.D.N.Y.?

JUDGE

DOCKET NUMBER

Check YES onlyifdemanded incomplaint

JURY DEMAND: YES Lxj\|0

ORGANIZATION ACT

FEDERAL TAX SUITS

[ ] 870 TAXES (U.S. Plaintiff or

Defendant)
[ ] 871 IRS-THIRD PARTY

(RICO)
[ ] 480 CONSUMER CREDIT
[ ] 490 CABLE/SATELLITE TV

RELATIONS

[ ] 740 RAILWAY LABOR ACT

IMMIGRATION

[ ] 550 CIVIL RIGHTS

[ ] 555 PRISON CONDITION
[ ] 560 CIVIL DETAINEE

[
[
[
[
[

j
!

[] 410 ANTITRUST

[ ]450 COMMERCE

[ ] 460 DEPORTATION

LIABILITY

PRODUCT LIABILITY

LIABILITY

[ ] 196 FRANCHISE

[ ] 423 WITHDRAWAL

[ ] 690 OTHER

INJURY PRODUCT

SUITS

[XJ190

21 USC 881

[ 1375FALSE CLAIMS

28 USC 158

[ ] 360 OTHER PERSONAL

STOCKHOLDERS

[]195

SEIZURE OF PROPERTY

NOTE: You must also submit at the time of filing the Statement of Relatedness form (Form IH-32).

!
j

(PLACEAN x INONEBOXONLY)

l*J 1 Original

ORIGIN

2 Removed from

Proceeding

LJ 3 Remanded D 4 Reinstated or

StateCourt

from

3. . ,

\_J 5 Transferred from 6 Multidistrict

Reopened

Appellate

(Specify District)

7 Appeal to District

Litigation

Judge from

Magjst^teJudge

I I b. Atleast one
party is pro se.

(PLACEAN x INONEBOXONLY)
BASISOFJURISDICTION
1 U.S. PLAINTIFF 2 U.S. DEFENDANT 3 FEDERAL QUESTION
[x] 4 DIVERSITY

IF DIVERSITY, INDICATE
CITIZENSHIP BELOW.

(U.S. NOT A PARTY)

CITIZENSHIP OF PRINCIPAL PARTIES (FOR DIVERSITY CASES ONLY)

(Place an [X] in one box for Plaintiffand one box for Defendant)
PTF

CITIZEN OFTHIS STATE

DEF

[ ]1 [ ]1

PTFDEF

CITIZEN ORSUBJECT OFA

[ ]3 [ ]3

FOREIGN COUNTRY

CITIZEN OFANOTHER STATE

M2

[]2

PTF

INCORPORATED and PRINCIPAL PLACE

DEF

[ ]5 [ ]5

OF BUSINESS IN ANOTHER STATE

INCORPORATED or PRINCIPAL PLACE

[]4[*4

FOREIGN NATION

[]6

[16

OF BUSINESS IN THIS STATE

PLAINTIFF(S) ADDRESS(ES) AND COUNTY(IES)

1. Frank M. Sullivan, Palatine, Illinois (Cook County)

2. James Peterik, Burr Ridge, Illinois (Cook County)

DEFENDANT(S)ADDRESS(ES) AND COUNTY(IES)

Sony Music Entertainment

2711 Centerville Road, Suite 400

Wilmington, Delaware 19808 (New Castle County)(Address of Incorporation)

550 Madison Avenue

New York, New York 10022 (New York County)(Address of Principal Place of Business)
DEFENDANT(S) ADDRESS UNKNOWN
REPRESENTATION IS HEREBY MADE THAT, AT THIS TIME, I HAVE BEEN UNABLE, WITH REASONABLE DILIGENCE, TO ASCERTAIN
RE9I8ENCE ADDRESSES OF THE FOLLOWING DEFENDANTS:

Check one:

THIS ACTION SHOULD BE ASSIGNED TO:

WHITE PLAINS

[x] MANHATTAN

(DO NOT check either box if this a PRISONER PETITION/PRISONER CIVIL RIGHTS
COMPLAINT.)

DATE 11/14/2014 SIGNATURE OF ATTORNEY OF RECORD

RECEIPT*

fa A /

/OK/W^J

ADMITTED TO PRACTICE IN THIS DISTRICT

^\ /1 -^

MYES (DATE ADMITTED Mo.1J

W^ ^

Attorney Bar Code#RW4039

Magistrate Judge is to be designated by the Clerk of the Court.

Magistrate Judge
Ruby J. Krajick, Clerk of Court by

U,' s,.ir-^-i;""'
Deputy Clerk, DATED

UNITED STATES DISTRICT COURT (NEW YORK SOUTHERN)

is so Designated.
.

Yr. 2013 )

JUDGE SCHOFIELD

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

-*

^.r

I /% |Jy

Q, "1

FRANK M. SULLIVAN, III, p/k/a

SURVIVOR, AND JAMES PETERIK,
Plaintiffs,

-against-

14 civ<

SONY MUSIC ENTERTAINMENT,

"

w J* w

Defendant.

o
-j

""*

o
o

COMPLAINT

:o
~*

Frank M. Sullivan, III ("Sullivan") and James Peteri*

("Peterik") (collectively

"Survivor"),

for

their

comprint

against Sony Music Entertainment ("Sony") allege:

Nature of the Case

1.

This is an action for breach of contract and a

declaratory judgment, arising from Sony's failure to properly

account to and pay royalties to the plaintiffs, founding members

of the musical group Survivor, with respect to master recordings

of musical performances ("Survivor Masters"). Sony's failure to
properly account to and pay royalties to Survivor is a material
breach of a recording agreement between Sony and Survivor.
2.

This action seeks damages for Sony's breach of

contract, a declaratory judgment that Sony is obligated to pay

Survivor royalties equal to fifty percent of Sony's net receipts

from

licensing

of

the

Survivor's attorneys'
this

Survivor

Masters,

and

an

award

of

fees and costs incurred in connection with

action.

Parties

3.
Palatine,

Sullivan

a citizen

of

Illinois,

domiciled

in

Illinois,

domiciled

in

Illinois.

4.
Burr Ridge,

Peterik

is

citizen

of

Illinois.

5.
partners

is

Sony

is

are Sony Music

and USCO Sub LLC,

Delaware

Holdings

General

Partnership,

whose

Inc., a Delaware corporation,

a Delaware limited liability company.

Sony's

principal place of business is located at 550 Madison Avenue,

New York,

New York.
Jurisdiction and Venue

6.

This Court has jurisdiction of the subject matter

pursuant to 28 U.S.C. 1332,

as there is complete diversity of

citizenship between the parties,

and the amount in controversy

exceeds

interest

has

$75,000.00,

exclusive

of

jurisdiction of the plaintiffs'

and

costs.

The

Court

action for a declaratory

judgment pursuant to 28 U.S.C. 1331 and 2201.

7.

this
State

Court,

Sony

as

is

subject

it transacts

of New York.

to the

and

personal

is doing

jurisdiction of

business

within

the

8.

Venue is proper in this District pursuant to 28

U.S.C. 1391(b) and (c) , as a substantial part of the events

giving rise to this action occurred in this District,

principal place of business is in the District,

Sony's

and Sony is

subject to the personal jurisdiction of this Court.

FACTS

9.

The

musical

band Survivor

was

formed

in 1977,

with Sullivan and Peterik as two of its founding members.

10.

into

an

Records,
6,

1983,

On

or

exclusive
Inc.,

about

November

recording

7,

1978,

agreement

Sony's predecessor-in-interest.

Survivor

entered

into

an

Inc.'s

Hereinafter,

the

successor

and

Scotti

Sony's

Brothers

entered

Scotti

Brothers

On or about June

amendment

agreement with Scotti Brothers Industries,

Records,

with

Survivor

Inc.,

of

the

1978

Scotti Brothers

predecessor-in-interest.

entities

and

Sony

are

collectively referred to as "Sony," and the 1978 agreement and

the 1983 amendment (attached as Exhibits 1 and 2,

respectively)

are referred to collectively as the "Agreement."

11.

Pursuant

to

the

recorded the Survivor Masters,

Agreement,

Survivor

created

which were delivered

and

to Sony.

Among the songs recorded were Survivor's blockbuster single "Eye

of the Tiger," which won multiple awards and achieved number one

status throughout the world,

and other Survivor hits,

"High on You" and "The Search Is Over."

including

12.

license

Under

the

distribute,

the

Survivor

advertise,

Agreement,

Masters

Sony

and

has

to

the

right

manufacture,

to

sell,

release and publicly perform "phonograph

records or other reproductions" embodying the Survivor Masters.

(Exhibit 1, 1 4)

13.

The Agreement defines "phonograph record" as "any

device, whether now known or unknown, on or by which sound may

be

recorded

for

later

transmission

to

listeners,

whether

embodying sound alone, or sound synchronized with or accompanied

by visual images,
speed

or

size,

including,

without limitation,

reel-to-reel

tapes,

discs of any

cartridges,

cassettes,

or

other prerecorded tapes;..." (Exhibit 1, SI 18) .

14.
records

Sony

embodying

thereafter
the

manufactured,

Survivor

Masters,

distributed,
and

licensed

sold
the

Survivor Masters.

15.
Survivor

The Agreement requires Sony to account to and pay

certain

royalties

in

consideration

for

Survivor's

creation and recording of the Survivor Masters.

Specifically,

the

LP

Agreement

sets

prerecorded tapes

forth

royalty

rates

of

(including reel-to-reel tapes,

records,

cartridges and

cassettes) or other recorded devices (other than discs), ranging

from

five

to

ten

(Exhibit 1, 1 6(a))

percent

of

suggested

retail

list

price.

16. The Agreement further provides that the royalty

payable to Survivor with respect to Survivor Masters licensed by

Sony "for phonograph record use on a flat-fee basis" and "for
all other types of use (other than phonograph record use) on a

flat-fee or royalty basis shall be an amount equal to fifty

percent (50%) of the net flat fee or net royalty, as the case

may be" received by or credited to Sony. (Exhibit 1, f 6(c)(v))

17. Notwithstanding

its

obligations

under

the

Agreement, Sony has failed to accurately account to and pay

Survivor the appropriate royalties called for by the Agreement.
18. Sony has incorrectly reported to Survivor the

quantity of products embodying the Survivor Masters sold or

licensed, has incorrectly characterized the products sold or

licensed, and has failed to pay Survivor the appropriate

royalties for the products it has sold or licensed.

19. Sony has failed to properly

royalties to Survivor for Survivor Masters
providers, such as iTunes, amazon.com and
distribute music downloads, mastertones,

account to and pay

provided to digital
others, which then
and ringtones to

consumers. Sony has further failed to properly account to and

pay royalties to Survivor for Survivor Masters provided to

providers of digital music streaming services, such as Spotify,

and video streaming services, such as YouTube. These
transactions are licenses of the Survivor Masters, for which

Sony is obligated to pay a 50 percent royalty to Survivor.

"Eye

of the Tiger" alone has been downloaded by consumers millions of

times.

20.

Sony

has

received

flat

fee

payment

for

individual download of

the Survivor Masters provided to

providers,

to

but

failed

account

for

and

pay

the

each

digital

appropriate

royalty rate to Survivor for the downloads.

21.
appropriate

As a result of Sony's failure to pay Survivor the

royalty

rates

for

Survivor

Masters,

Survivor

has

been injured in an amount to be determined.

22.

On

monetary

and

disputes

from

others,

information

other

unauthorized

consideration

entities

arising

and

from

download,

such

as

those

result

Napster,

distribution

has
of

received

lawsuits

Grokster,

Kazaa,

participation

and/or

use

of

or

and

in

the

recordings,

To the extent that proceeds from

revenue

that

would have generated royalties for the plaintiffs'

benefit,

Sony

failed

result,

to

constitute

the

Sony

lost

has

actions

as

entities'

including the Survivor Masters.

these

belief,

account

Survivor

unaccounted

for

has
and

to

compensation

or

been

pay

royalties

injured

unpaid

for

in

royalties,

to

the
in

Survivor.
amount

an

As

of

amount

such
to

be

determined.

23.

Furthermore,

improperly charged and

on

deducted

information

and

from royalties

belief
due

Sony

has

to Survivor

certain promotion and marketing

and

expenses are

Agreement.

not

Moreover,

costs and expenses.

properly chargeable to

Such costs

Survivor under the

Sony has failed to substantiate these costs

in any fashion.

24.

As early as 2011,

Survivor,

through its agents,

notified Sony of its objections to Sony's improper accounting

and

payment

licenses

of

of

royalties,

the

Survivor

streaming

and

other

deductions

for

marketing

including

Masters

those

for

accounting

attributable

digital

downloads

anomalies

expenses.

Despite

to

and

including
the

the

plaintiffs'

objections and extensive discussions among the parties regarding

those

objections,

practices.

event
what

Indeed,

Sony

has

failed

to

correct

Masters

termed

from

"the

the

improper

a Sony representative threatened that in the

Survivor persisted in its objection,

it

its

nuclear

songs

option"

licensed

to

Sony would exercise

removal

iTunes

of

for

the

Survivor

download

by

consumers, thereby wiping out that revenue stream altogether. By

threatening

that

its

transaction with iTunes is a license subject to termination,

and

not a sale,

"the

option,"

Sony

has

conceded

of the Survivor Masters to iTunes.

25.

On

asserting these

the

nuclear

Northern

January

claims

District

31,

in the

of

2014,

United

Illinois.

Survivor

States

Sony

filed

District

moved

to

suit

Court

for

dismiss

the

complaint for, inter alia, lack of personal jurisdiction; Sony's

7

motion

was

granted

in

part

on

October

29,

2014.

At

no

time

before or since the filing of the Illinois action has Sony cured
its violations of the Agreement.
26.

Masters

Sony

as

has

failed

Sony has

"sales" of

characterized

records;

mischaracterized

to

pay

Survivor

the

however,

download

even

the

downloads

in

many cases

as

lower

of

in

"sale,"

"sale"

Survivor

which

Sony

royalty

that

has
is

provided for in the Agreement.

27.
to

the

Sony has

Survivor

retained all

Masters,

rights,

including

but

title

not

and interest

limited

to

those

enumerated in 17 U.S.C 106 and 114, including the copyrights

to the Survivor Masters.

Furthermore,

Sony has asserted a right

to cease exploitation of the Survivor Masters,

including digital

downloads.

28.
providers

with

inconsistent

retained
that

the

with

all

Sony's

correct,

The

Survivor

Masters

restrictions

sale

copyrights

are

and

characterization

of

to

authorizations

transaction.

in the

provided

Survivor
the

that

Moreover,

as

Masters

and

transaction

as

digital

are

Sony

has

assuming
"sale"

is

then the digital providers may not reproduce or permit

reproduction

of

the

Survivor

Masters

without

committing

copyright infringement in violation of 17 U.S.C 501.

29.
asserted

On

information

infringement

of

and

copyrights

belief,
in

the

Sony

has

Survivor

never
Masters

against

Apple

Inc.

or

amazon.com,

arising

from

Apple

and

amazon.corn's provision of digital downloads to consumers via the

Apple iTunes Store or amazon.com.

30.

Pursuant to 17 U.S.C 203,

the plaintiffs are

entitled to terminate the assignment to Sony of the copyrights

to the Survivor Masters as early as 2017.
31.

Sony and

its predecessors

have

known

or

should

have known, since the inception of the Agreement in 1978, of the

plaintiffs'

rights to terminate the assignment of and reclaim

ownership of the copyrights in the Survivor Masters.

32.

If

Sony's

characterization

of

the

transactions

between it and the digital providers as a "sale" is correct,

then Sony's failure to assert the copyrights

in the Survivor

Masters could potentially have a significant impact on the value

of

the

copyrights

and

of

the

plaintiffs'

termination

rights

under the Copyright Act.

COUNT

BREACH OF CONTRACT

33.

Survivor realleges each allegation in paragraphs

1-32 above as paragraph 33 of Count I.

34.

The Agreement between Survivor and Sony is valid

and enforceable.

35.

Survivor

under the Agreement.

has performed each of its obligations

36.

Sony has failed to perform its obligations under

the Agreement in at least the following respects:

(a)

Mischaracterizing

as

"sales"

licenses

unaffiliated providers of digital music downloads,

music

streaming

thereby

services,

reporting

and

and

paying

video

streaming

only

to

digital

services,

fraction

of

the

royalties rightfully due Survivor;

(b)
Survivor

Failing
for

to

account

payments

or

other

to

and

pay

royalties

consideration

received

to
by

Sony as the result of lawsuits and disputes against third

parties

for

the

unauthorized

sale of Survivor Masters;

(c)

Deducting

download,

distribution,

or

and

from

royalties

payable

unauthorized and unsubstantiated charges

to

Survivor

for promotion

and

marketing.

Sony's failures to accurately account to

and pay

appropriate

royalties to Survivor are a material breach of the Agreement.

37.

As

result

of

Sony's

material

breach

of

the

Agreement, Survivor has suffered substantial monetary damages in

excess of $75,000,

38.

exclusive of interest and costs.

Furthermore,

the

Agreement

provides

that

in

the

event of any action or suit between the parties arising from the
Agreement,
from the

the

prevailing

party

other its attorneys'

shall

fees
10

be

entitled

to

recover

incurred in connection with

the

suit,

in

addition

to

costs.

Accordingly,

Survivor

is

entitled to its attorneys' fees and costs incurred in connection

with this action.
COUNT

II

DECLARATORY JUDGMENT

39.

Survivor realleges each allegation in paragraphs

1-32 above as paragraph 39 of Count II.

40.

Survivor

seeks

a declaration

that,

pursuant

to

the Agreement, the plaintiffs are entitled to royalties equal to

fifty percent (50%) of the net proceeds received by or credited
to Sony derived from the use of Survivor Masters by providers of

digital

music

downloads,

digital

music

streaming

and

video

streaming. Sony denies that it has any such obligation under the
Agreement,

and

further insists that

it may

deduct

costs

for

promotion and marketing from any royalties payable to Survivor,

despite the absence of any authorization for such deduction in
the Agreement.

41.

There is a present controversy between Survivor

and Sony, for which Survivor has no adequate remedy at law and
for which a declaratory judgment

should be entered,

that the

plaintiffs are entitled to royalties to Survivor equal to fifty

percent

(50%)

of the net proceeds received by or credited to

Sony attributable to the use of Survivor Masters by providers of

digital

music

downloads,

digital
11

music

streaming

and

video

streaming,

and that such royalties are not subject to deductions

for unsubstantiated promotion and marketing costs.

PRAYER

WHEREFORE,

Sullivan

FOR

and

RELIEF

Peterik

ask

that

the

Court

enter judgment in their favor as follows:

1.
compensatory

judgment

damages,

in

an

awarding

Sullivan

amount

be

to

and

determined

Peterik
at

trial,

for Sony's breach of the Agreement;

2.

the

An order and judgment declaring that,

Agreement,

the

plaintiffs

are

entitled

to,

pursuant to

and

Sony

is

obligated to account to and pay, royalties to Survivor equal to

fifty percent

(50%)

of the net proceeds received by or credited

to Sony derived from the use of Survivor Masters by providers of

digital

music

streaming,

downloads,

digital

music

streaming

and that such royalties are not

and

video

subject to deduction

for unsubstantiated promotion and marketing costs and expenses;

3.

An

order

preliminarily

enjoining

Sony

from

terminating or suspending any license of the Survivor Masters to

providers
and

of

video

digital

streaming,

music
or

downloads,

taking

any

digital
other

music

action

streaming

that

would

impair the access to Survivor Masters presently enjoyed by such

providers;

4.

An

award

of

Sullivan's

and

Peterik's

fees and costs incurred in connection with this action;

12

attorneys'

Dated:

5.

Prejudgment and post-judgment interest; and

6.

Such other relief as the Court deems appropriate.

New York, New York

November 14, 2014

Respectfully submitted,

DUNNEGAN

By

&

SCILEPPI

LLC

tM- ^-

Richard Weiss

(RW4039)

rw@dunnegan.com
William Dunnegan (WD0415)
wd@dunnegan.com
Attorneys for Plaintiffs
Frank M.
James

Sullivan,

III

Peterik

350 Fifth Avenue, Suite 490!

New York, New York 10118
(212)

332-8300
-and-

MCGARRY

&

MCGARRY

Annette M.

LLC

McGarry

Marianne C.

Holzhall

120 North LaSalle Street,

Suite

Chicago,
(312)

13

1100

IL 60602

345-4600

Exhibit

SCOTTI BROTHERS RECORDS, INC'.'"//^^

9229 Sunset Boulevard

., 0 ^J Kj
Los Angeles, California 90069' ' .
Q^a
)x)l/. ?,'/ FT)

-ee-twsfe-s^ssafe-,

1973

Messrs. James M. Peterik, David Wayne

3ickler, Derinis Keith Johnson, Frank
Sullivan III and Robert Gary Smith, p/k/a

"Survivor"
c/o irell and Manella
1800 Avenue of the Stars
Suite # 900

Los Angeles, California

Attention:

90067

Harley Williams, Esq,

Gentlemen:

The following shall constitute your and our aoree-

ment with respect to your recording for us during the term

or this contract of master recordings embodying your perform

ances (Hereinafter sometimes referred to individually by the

term "Master" and collectively by the term "Masters"):
1.
The term of this contract shall consist of
an initial term commencing as of the date hereof and con
tinuing for a period of fifteen (15) months, and of the

aaaitional renewal term or terms hereinafter provided.

....

<a)

During the initial term hereof you

shall initially record for us Masters sufficient to consti

tute one (1) 12-inch 33-1/3 rpm longplaying record of

approximately thirty-five (35) minutes duration (hereinafter
sometimes referred to individually by the term "LP" and

collectively by the term "LPs"), we hereby agree to record

and to commercially release such LP and at least one (1)
single" during the initial term hereof. At our option,
which shall be exercised in writing, if at all, within
ninety (90) days after the initial U.S. release of the

first LP but in no event after the expiration of the initial

term, you .shall also record for us during the initial term
hereof additional Masters sufficient to constitute not more
t..an one (1) additional LP. in each renewal term hereof
pursuant to paragraph 19, you shall record for us Masters

sufficient to constitute one (1) LP, and at our option,

which shall be exercised in writing, if at all, within
ninety (90) days after the initial U.S.- release of- the
preceding LP but in no event after the expiration of such
renewal term, you shall also record for us during such
renewal term additional Masters sufficient to constitute not

more than one (1) additional LP,

The Masters which you are

required to record hereunder in accordance with the faces-

going are hereinafter sometime referred to collectively as

your recording commitment".
-1-

AA 0001

_ .
., , <b) Each Master shall emboay your performance
previously unrecorded by you and .shall be recorded in its
entirety at a recording studio or studios. Accordingly, but

as 8he sole featured artist of a single musical composition

without limiting the.generality of the foregoing, no Masters

shall be recorded in whole or in part at live concerts or

other live performances unless we agree otherwise by prior

written agreement.' Each LP hereunder shall embody no less

than eight (8) and no more than ten (10) musical composi
tions.

You snail record the Masters hereunder upon such dates

ana -at such locations as shall be mutually agreed upon by you

and us after reasonable notice to you. The musical composi
tions or other selections which shall be embodied in the

Masters, the individual producer of the Masters, and all other

individuals rendering services in connection with the record

ing of the Masters shall also be subject to our mutual appro

val. Each Master shall be subject to our approval as commer

cially and technically satisfactory for the manufacture and
sale of phonograph records, and upon our request, you shall
rerecord any musical composition or other selection until a
Master commercially and technically satisfactory to us shall
have been obtained.

(c)

You shall not record hereunder nor shall

we be obligated to accept as applying toward the fulfillment

of your recording commitment Masters constituting a so-called

multiple album" (i.e., a single package containing two

(2) or more LPs (or their tape equivalent] which is sold as a
single unit). However, in the event you shall do so, and
we shall so accept such Masters hereunder, then at our elec
tion, for the purpose of calculating the number of masters

which shall apply toward the fulfillment of your recording

commitment, such Masters shall be deemed to be the equivalent

of only one (1) LP.

(d)

Any master recordings which are not

recorded or delivered in all respects in accordance with the

terms and provisions hereof shall not, unless we otherwise

consent, in writing, apply toward the fulfillment of your

recording commitment, For purposes of this agreement,
master recordings shall be deemed recorded and delivered

toward the satisfaction of your recording commitment unless

we shall give you notice, setting forth our objections

thereto, within thirty (30) days after your delivery to us

of such master recordings. Furthermore, in the event we

shall make any payments in respect of any such master
recordings which shall not have been recorded or delivered

in all respect in accordance with the terms and provisions

hereof, you shall, upon our demand, promptly reimburse us
for any such payments. In the event you shall fail to so
reimburse us, we shall, in addition to all of our other
rights or remedies which we may have in such event, have the

right to deduct an amount equal to such payments from any

monies payable by us to you hereunder.

(e)

In the event you shall for any reason

whatsoever delay the commencement or completion of, or be

AA 0002

unavailable for, any recording sessions hereunder unless

such delay was in any way caused by us or within our control,

you shall, upon our demand, promptly reimburse us for any
expenses or charges actually incurred or paid by us by
reason thereof.

the event you shall fail to so reimburse

us, we shall, in addition to all of our other rights or

remedies which we may have in such event, have the right to
deduct an amount equal to such expenser or charges from anv
monies payable by us to you horeu-'er,
3.

(a)

Recording sessions for the Masters shall

be conducted under our recording licenre. No recording

sessions shall be commenced hereunder nor shall any commitments
be made or costs incurred in connection therewith unless and
until a proposed recording budget for the Masters to be

recorded at such sessions shall have been submitted by you in

writing and approved in writing by one of our officers.

We

shall not be responsible for any payments to any individuals

rendering services in connection with the recording of the
Masters which exceed union scale unless such excess and the

proposed recipients thereof are specified in said budget and

approved by us. We shall not be responsible for any penalties
incurred for late payments caused by your delay in submitting
union contract forms, report forms or bills, unless we shall

agree to pay said penalties, in which case, they shall be

deemed part of the recording costs. We shall pay the
recording costs of the Masters recorded at recording sessions
conducted hereunder in accordance with the terras and provi

sions hereof in an amount not in excess of the recording

budget therefor approved in writing by one of our officers.
In the event the recording costs of such Masters shall

exceed the approved budget therefor, our sole remedy against

you shall be to deduct an amount equal to all such excess
costs from any monies payable by us to you hereunder.
(b)

All union contract forms and report forms

for recording sessions hereunder, all bills pertaining to

such recording sessions and all necessary payroll forms
(including, without limitation, all necessary W4 and other

withholding tax forms) pertaining to such recording sessions

shall be submitted by you to us within forty-eight (48) hours
after each recording session and in accordance with all
applicable union requirements so that we shall be able to make

all payroll payments without penalty for late payment.

(c)

We

shall make all miminum union scale

payments required to be made to you in connection with your

recording services hereunder. All such, payments, as well as
all payments to any other individuals rendering services in
connection with the recording of the Masters, all other
payments which are required to be made by us pursuant to
any applicable law or regulation or the provisions of any
collective bargaining agreement between us and any union or
guild representing you or any such other individuals rendering
AA 0003

services in connection with the recording of the Masters

(including, without limitation, payroll taxes and payments to
union pensions and welfare funds, but excluding payments based
on sales), all amounts paid or incurred by us for studio or
hall rentals, tape, engineering, editing, instrument rental
and cartage, mastering, transportation, accommodations,
immigration clearances, and so-called "per diems" in respect
of any individuals (including you) rendering services in
connection with the recording of the Masters together with any
and all other amounts paid or incurred by us in connection

with the recording of'the Masters through the completion of

lacquer Masters shall be recoupable from royalties earned by
you hereunder.

4.
All master recordings recorded by you during
the term hereof, from the inception of the recording thereof,
and all phonograph records and other reproductions made
therefrom, together with the performances embodied therein
and all copyrights therein and thereto, and all renewals

and extensions thereof, shall be entirely our property,

free cf any claims whatsoever by you or any other person,
firm of corporation. We shall, accordingly, have the sole and
exclusive right to copyright such master recordings, phono
graph records, or other reproductions, in our name, as the
owner and author thereof, and to secure any and all renewals
and extensions of such copyrights (it being understood for
such purposes you and all other persons rendering services in

connection with such master recordings shall be our employee

for hire). Nevertheless, you shall, upon our request, execute
and deliver to us any assignments of copyrights (including
renewals and extensions thereof)

in and to such master record

ings as we may deem necessary, and you hereby irrevocably

appoint us your attorney-in-fact for the purpose of executing
such assignments in your name. Without limitation of any of
the foregoing, we and/or our designees shall have the exclu
sive worldwide right in perpetuity except as hereinafter
restricted to manufacture, sell, distribute, and advertise
phonograph records or other reproductions (visual* and nonvisual) embodying such master recordings, to lease, license

convey or otherwise use or dispose of such master recordings

by any method now or hereafter known,

in any field of use,

to

release phonograph records or other reproductions embodying

such master recordings under Scotti Brothers Records, Inc.'s
first line label or tradenames, or labels, to perform such
phonograph records or other reproductions publicly, and to
permit the public performance thereof by radio or television
broadcast, or any other method now or hereafter known, all
upon such terms and conditions as we may approve,' and to
permit any other person, firm, or corporation to do any or all
of the foregoing or we may refrain from doing any or all of
the foregoing.

* see paragraph 18
AA 0004
-A-

a.
We shall have the worldwide right in perpetuitv
to use and to permit others to use your name (both legal
and professional, and whether presently or hereafter used bv
you), likeness, other identification, biographical material'
concerning you, and the name and likeness of any producer

rendering services in connection with the master recordings

recorded by you during the term hereof, for purposes of
trade, and otherwise without restriction, in connection with
such master recordings,, the phongrapH records derived
-herefrom; and our record business-and products. It is
expressly understood and agreed that no so-called "merchan-

aising rights" are granted to us hereunder, and accordingly

we shall not have the right to use or license others to use
your name and/or likeness in connection with anything other
than as specifically provided above, it being understood and
agreed that we shall have no right to and shall not derive
any profit from such promotional activities. We shall have

the further right to refer to you during the term hereof by

your legal or professional name as our exclusive recording
artist and you shall in your activities in the entertainment
field use all reasonable efforts to be billed and advertised

curing the term hereof as our exclusive recording artist.

Except in connection with the sale of phonograph records
pursuant to preexisting recording agreements covering your
services as a recording artist, the rights granted to us
pursuant to this paragraph with respect to your name,
likeness, other identification and biographical material
concerning you shall be exclusive during the term hereof and

nonexclusive thereafter. Accordingly, but without limiting

the generality of the foregoing, you shall not during
the term hereof authorize or permit any person, firm or
corporation other than us to use your legal or professional

name,or your likeness in connection with the advertising or

sale or phonograph records. We agree to advise and consult
with you regarding the layout and artwork for covers of
albums or singles produced hereunder, so that such artwork
will be mutually approved by you and us.
6.

In consideration for your performance of all

services hereunder, you shall be paid in respect of the sale

by us or our licensees of phonograph records embodying the

Masters recorded hereunder and in.respect of any other exploi
tation by us or our licensees of such Masters, the followino
royalties upon the terms hereinafter set forth:
(a)

(i)

In respect of LP records sold in

the United States in the form of discs, and in respect -of

LP records sold by us in the United States in the form of

prerecorded tapes (including reel-to-reel tapes, cartridges

and cassettes) or other recorded devices (other than discs),
we shall pay you a royalty at the rate of ten percent (10%) of
the suggested retail list price from time to time of such '
records; (ii) in respect of records sold in the United
States in the form of singles (as defined herein), we shall

pay you a royalty rate of ten percent (10%) of the suggested

retail list price from time to time of such records; ftod

Q_

'

(iii) in respect of records sold by our licensees in the

United States in the form of pre-recorded tapes (including

reel-to-reel tapes, cartridges and cassettes)

or other recor

ded devices (other than discs), we shall pay you a royalty

at the rate of one-half (1/2) of the aforementioned royalty
rate based upon the suggested retail list price from time to
time of

such records.

(b)

In respect of LP records and singles sold

outside of the United States we shaJLl pay you a royalty at the

rate of the following applicable percent of the suggested
retail list price from time to time of such records in the

country of manufacture, the country of sale, the country of

import, or the country of export, as we shall be paid, in
accordance with the following: Canada - nine percent (9%);
United Kingdom, Australia and Japan - six percent (6%); all
countries outside of the United States, Canada, United
Kingdom, Australia and Japan - five percent (5%). If there

are no suggested retail list prices of records in any

particular country, then for the purposes of computing

royalties hereunder, the prices of records in such country

generally regarded as the equivalent thereof shall be deemed

the suggested retail list prices of such records,

(c)

Notwithstanding any of the foregoing:

(i)
the royalty rate in respect of
records sold throughout any direct mail or mail order distri

bution method (including, without limitation, record club

distribution) shall be one-half (1/2) of the otherwise appli

cable royalty rate as calculated in accordance with the

foregoing provisions, or one-half (1/2) of the net royalty

which we shall receive or which shall be credited to advances

previously received, by us from any licensee distributing such

records, whichever

is less;

(ii)
the royalty rate in respect of the
sale of records on a mid-priced record line shall be three-

fourths (3/4) of the otherwise applicable royalty rate as

calculated in accordance with the foregoing provisions and the
royalty rate in respect of the sale of records on a budget
record line or low-priced record line shall be one-half (1/2)
of the otherwise applicable royalty rate as calculated in
accordance with the foregoing provisions;
(iii)

the royalty rate in respect of

records sold for use as premiums or

in connection with the

sale, advertising, or promotion of any .other product or

service (which sales shall be subject to your prior consent),
shall be one-half (1/2) of the otherwise applicable royalty
rate as calculated in accordance with the foregoing provi
sions, and shall be based.upon the price received by us or
credited against advances previously received by us for such
records sold by us and upon the price utilized by our licen
sees in accounting to us for such records sold- by our
licensees;
AA 0006

(iv) the royalty rate in respect of

records sold tc the United States Government, its subdivi
sions, departments or agencies (including records sold for
resale through military facilities), and in respect of records
sold to educational institutions or libraries, shall be the

otherwise applicable royalty rate reduced in the same propor

tion as our royalties are reduced and shall be based .upon the
price upon which our royalties are calculated; and
(v)

the royalty rate in respect of

Masters licensed by us for phonograph- record use on a flat-fee

basis, or with respect to so-called compilation albums sole
through retail stores in conjunction with special radio

or television advertisements (including, without limitation,

records of the type presently distributed by K-Tel) on a
royalty basis and for all other types of use (other than
phonograph record use) on a flat-fee or royaltv basis shall be
an amount equal to fifty percent (50%) of the net flat fee or

net royalty, as the case may be, received by us or credited

against advances previously received by us in respect of '
each such use. Notwithstanding the foregoing, any synchroni
zation of the Masters with theatrical motion pictures or

television programs during the term hereof shall be subject to

your prior consent.

(d)

Notwithstanding any of the foregoing,

no royalties shall be payable on records furnished as free or

bonus records to members, applicants, or other participants in

any record club or other direct mail distribution method;
on records distributed for promotional purposes to radio

stations, television stations or networks, record reviewers,

or other customary recipients of promotional records; on
so-called "promotional sampler" records; on records sold as
scrap, or "cut-outs"; and on records furnished on a so-called

"no-charge" basis or sold at less than fifty percent (50%)

of their regular wholesale price to distributors, subdistrib
utors, dealers, or others, whether or not the recipients
thereof are affiliated with us. Notwithstanding the fore
going, you shall be paid royalties for each record sold

pursuant to this subparagraph 6(d) for which we are paid by

our distributor, and you shall not be treated, for the
purposes of this subparagraph 6(d), substantially different

from the majority of other artists on our label.

Further,

notwithstanding the foregoing, records shall not be sold as

"cut-outs" for at least one (1) year following the initial

U.S.

release of such

(e)

record.

Notwithstanding any of the -foregoing,

royalties in respect of records sold at a discount- to

distributors, subdistributors, dealers, or others, whether

or not affiliated with us (except for records sold at less

than fifty percent (50%) of their regular wholesale price,

for which no royalties are payable hereunder) shall be
reduced in the same proportion as the regular wholesale
price of such records is reduced on such sales.
?_

AA 0007

(f)

Notwithstanding any of the foregoing:

(i)
for purposes of computing royalties
there shall be deducted from the suggested retail list price
(or other applicable price, if any, upon which royalties are
calculated) of phonograph records hereunder an amount equal to
any excise, sales, value added, or comparable or similar
taxes which are included in the sales price thereof;
(ii)

for purposes of computing royalties,

there shall be deducted- from the suggested retail list price

(or other applicable price, if any, upon which royalties are
calculated) of phonograph records hereunder, an amount equal
to twelve and one-half percent (12-1/2%) thereof for 45 rpm
single records packaged in color or other special printed
sleeves, and for long playing or extended play records in disc
fortrs packaged in our standard "single fold" album jackets
without any special elements (such as, but not limited to,
inserts or attachments); fifteen percent (15%) thereof for all
other long playing or extended play records in disc form; and
twenty percent (20%) thereof for reel-to-reel tapes, cart
ridges, cassettes or other recorded devices (other than

discs). We hereby agree that in the event any other artist

who records for us exclusively throughout the world is treated
more favorably than you with respect to the matters set forth
in this subparagraph, this agreement shall be amended to
accord you such more favorable treatment;
(iii)

for sales within the United States,

royalties shall be computed and paid upon ninety percent

(90%) of net sales for which payment has been received
by us or credited to our account; provided, however, that if

any licensee distributing records hereunder through record

clubs or other methods of mail order distribution shall

compute and pay royalties to us in respect of such records

on less than ninety percent (90%) of net sales, your royal

ties hereunder with respect to such record shall be computed
and paid on the same percentage of sales as such licensee

shall utilize in computing and paying to us royalties in

respect of such records;
(iv)

and
for sales outside the United States

States, royalties shall be computed and paid upon ninety

percent (90%) of net sales for which payment has been re
ceived by us or credited to our account; provided, however,
that if any licensee distributing records hereunder through
record clubs or other methods of mail order distribution

shall compute and pay royalties to us in respect of such

records on less than ninety percent (90%) of net sales, your
royalties hereunder with respect to such record shall be
computed and paid on the same percentage of sales' as such
licensee shall utilize in computing and paying to us royal
ties in respect of such records; and
-8-

AA 0008

(v)

records distributed

in

the United

States by any of our affiliated branch wholesalers shall be

deerr.ed sold for the purposes of this contract only if sold by

any such affiliated branch wholesale to one of its independent
third party customers..

(g)

Notwithstanding any of the foregoing:

(i)

the

royalJLy. payable to you hereunder

with respect to any phonograph record embodying Masters

hereunder together with other master recordings (which
coupling shall require your prior consent during the term)
shall be computed by multiplying the otherwise applicable
royalty rate by a fraction, the numerator of which shall be
the

nu'nber of selections contained

on

the Masters hereunder

which are embodied on such phonograph record and the denomi

nator of which shall

be

the

total

number of selections

embodied on such phonograph record;

and

(ii)
the royalty payable to you hereunder
and the recording costs hereunder with respect to any Master
recorded hereunder by you jointly with any other artist or
musician to whom we are obligated to pay a royalty in respect
of such Master shall be computed by multiplying the otherwise
applicable royalty rate and recording costs by a fraction, the
numerator of which shall be one (1) and the denominator of
which shall be the sum of one (1) and the total number of such

other artists or musicians whose performances are embodied

thereon.

7.

(a)

Statements as to royalties payable here

under shall be sent by us to you on or before the 30th day of

September for the semi-annual period ending the preceding June
30th and on or before the 31st day of March for the semi
annual period ending the preceding December 31st, together
with payment of accrued royalties, if any, earned by you
hereunder during such semi-annual period, less all advances
and charges under this contract.
We shall have the right to
retain, as a reserve against charges, credits, or returns,
such portion of payable royalties as shall be reasonable in
our best business judgment, not in excess of, and to be

.liquidated at the same time as, those held with respect to your
records hereunder by our distributor.
Free goods shall be
credited upon their return in the same ratio as shipped.
(b)

No royalties shall be payable to you in

respect of sales of records by any of our licensees until

payment therefor has been received by us or credited to our

account.
Sales by any such licensees shall be deemed to
have occurred in the semi-annual accounting period during
which such licensees shall have rendered to us accounting
statements

for

such

sales.

AA 0009

-9-

contract, shall constitute advances recoupable from any

sums payable under

this contract.

(g)
We shall have the right to deduct from
any amounts payable to you hereunder such portion thereof as
may be required to be deducted under the applicable provisions
of the California Revenue and Taxation Code or under any
ether applicable statute, regulation, treaty or other law, or
under any applicable union or guild agreement, and you shall
promptly execute and deliver to us such forms and other
documents as may be required upon yo~ur request in connection
therewi th.

S.
(a)
All selections recorded in any Masters
hereunder which are written or composed by you, in whole
or in part, alone or in collaboration with others, or which
are owned or controlled, in whole or in part, directly or
ir.directiy, by you or any person, firm or corporation in which

you have a direct or an indirect interest (herein referred, to

as "Controlled Compositions") are hereby licensed to us for
the United States and Canada at the applicable royalty rates
set forth below per selection on the basis of records sold,
less returns and credits, except that copyright royalties
in respect of any records for which no royalties are payable
pursuant to paragraph 6 hereof shall be payable at the rate of
one cent (1)
States

and

for each Controlled Composition for the United

Canada.

(i)

For the United States -- two and

three-fourths cents (2-3/4$>!) for each Controlled Composi

tion; and for Canada -- two cents (2jzf) for each Controlled
Composition.

(ii)
Notwithstanding the foregoing,
with respect to records distributed in the United States,
the maximum aggregate copyright royalty rate payable by us in
respect of any long-playing record album hereunder containing
one (1) or more disc records or the tape equivalent, regard
less of the number of selections contained therein, shall be
twenty-seven and one-half cents (27-l/2) and the maximum
aggregate copyright royalty rate payable by us in respect of
any 45 rpm single record hereunder, regardless of the number
of selections contained therein, shall be five and onehalf cents (5-l/2f>f).
With respect to records distributedin Canada, the maximum aggregate copyright royalty rate
payable by us in respect of the records described in the
foregoing sentence shall be twenty cents (20) and four
cents (4$r), respectively. Accordingly, in the event the
a
actual
aggregate copyright royalty rate which we shall be
required to pay in respect of any longplaying record album
or any 45 rpm single record hereunder shall exceed the appli
cable maximum aggregate copyright royalty rate hereinabove
specified, then the aggregate copyright royalty rate for

_H_

AA 00011

the Controlled Compositions, if any, contained thereon shall

be reduced by an amount equal to such excess.
If the actual

aggregate copyright royalty rate which we shall be required to

pay in respect of any such long-playing record album or 45 rpni
single record, as the case maybe, shall, even as reduced in

accordance with the immediately preceding sentence, still

exceed the applicable maximum aggregate copyright royalty rate
hereinabove specified, then we shall have the right, at our
election, in addition to all other rights or remedies which we
may have in such event, to deduct an amount equal to the
additional payments'required to be made by us as a result
thereof from any monies payable to you hereunder.
(iii)
No copyright royalties shall be
payable in respect of Controlled Compositions which are
arrangements of selections in the public domain.
in the

event, however, the applicable performing rights organization

credits the publisher with respect to the public performance
of such arrangement, then, notwithstanding anything to the
contrary contained herein, such arranged version shall be

licensed to us at a copyright royalty to be calculated by

taking the rate applicable with respect to Controlled

Compositions hereunder and multiplying such rate by the

percentage utilized by the applicable performing rights
society or organization (ASCAP or BMI) in determining the
credits to be given to the publisher of such arranged
version for public performance of the work; provided,
however, that you shall furnish to us a copy of the letter
from such performing rights society or organization setting
forth the percentage of the otherwise applicable credit
which the publisher shall receive for such public performances.
In the event you fail to provide us with such letter from

the performing rights society or organization, we shall not

be obligated to pay any copyright royalty with respect to
any such arranged version.

(iv)

Any assignment made of the ownership

or copyrights in or the rights to license or administer the

use of any Controlled Compositions shall be subject to the

terms and provisions hereof.

(b)
be issued to

You shall, upon our request, cause to

us mechanical licenses for all selections

recorded in any Masters hereunder which are not Controlled

Compositions, Such mechanical licenses as you shall cause to

be issued to us shall be at rates and upon terms no less
favorable to

us than those contained

in the then current

standard mechanical license issued by The Harry Pox Agency,

Inc.

9.

You hereby warrant, represent and agree that:

(a)
You are under no disability, restriction
or prohibition, whether contractual or otherwise, with respect
AA 00012

to your right to execute this contract, to grant the rights

granted by you to us hereunder, to perform each and every ter~.
and provision hereof, and to record each and every selecticr,
recorded by you hereunder.
In this regard, you specifically
warrant and represent that no selection recorded by you
hereunder is or shall be subject to any re-recording or other
restrictions pursuant to any other agreement to which you are
or have- been party or by which you are otherwise bound.

(b)

During the terrn_cf this contract you

shall become and remain a member in good standing of any

appropriate labor union or unions with which we may at any
time have an agreement lawfully requiring such union
membership.

(c)
No Controlled Compositions nor any other
selections, materials, ideas or other properties furnished
cc selected by you and embodied or contained

in or used

in connection with the Masters or the packaging or advertising

for phonograph records hereunder will violate or infringe

upon any common law or statutory right of any person, firm or
corporation, including, without limitation, contractual
rights, copyrights and rights of privacy.

10.
(a) During the term of this contract, you
shall not enter into any agreement or make any commitment
which would prevent your performance of any of the terms and.
provisions hereof nor shall you perform or render any record

ing services as a recording artist for the purposes of making

phonograph records or master recordings for any person, firm
or corporation other than us. After the expiration or termina
tion of the term of this contract, you shall not prior to the
later of the following dates perform for any person, firm or

corporation'other than us, for the purpose of making phono

graph records or master recordings, any selection which shall

have been recorded hereunder;

(i) the date five (5) years

subsequent to the date on which such selection shall have been

last recorded hereunder, or two (2) years subsequent to the

expiration or termination of the term of this- contract (such

later date in respect of any such selection being hereinafter

sometimes referred to as the "Restriction Date").

(b)

You shall not at any time manufacture,

distribute or sell or authorize or knowingly permit the

manufacture, distribution or sale by any person, firm or
corporation other than us of phonograph records embodying
(i) any performance rendered by you during the term of this
contract or (ii) any performance rendered by you after the
expiration or termination of the term of' this contract of a
selection recorded hereunder if such performance shall have

been rendered prior to the Restriction Date applicable there

to.

Furthermore, you shall not record or authorize or know

ingly permit to be recorded for any purpose any such

-13-

AA 00013

performance without in each case taking reasonable measures to

prevent the manufacture, distribution or sale at any time by
any person, firm or corporation other than us of phonograph
records embodying such performance.
Specifically, but without
limiting the generality of the foregoing, if during the term
of this contract you perform any selection for the purpose of
making transcriptions for radio or television or soundtracks
for motion pictures, or if, after the expiration or termina
tion of the term of this contract, you perform for any such
purpose any selection recorded hereunder prior to the Restric
tion Date applicable thereto, you wfll do so only pursuant to
a written contract containing an express provision that

neither such performance nor any recording thereof will be

used directly or indirectly for the purpose of making phono
graph records.
Upon our request, you shall promptly deliver'
to us a copy of the pertinent provisions of each such contract
and you shall cooperate fully with us in any controversy with
any third party which may arise or litigation which may be
instituted relating to our rights pursuant to this paragraph.
(c)
Notwithstanding anything to the contrary
set forth herein, you have the right to perform as a nonfeatured "sideman" on records embodying the performances of
other artists so long as you do not perform any "solos", your
name is not displayed more prominently than any other "sideman" on the applicable record, and we are given a courtesy
credit wherever your name appears.
11.
You expressly acknowledge that your services
hereunder are of a special, unique and intellectual character
which gives them peculiar value, and that in the event of a
breach by you of any term, condition or covenant hereof,

we will be caused irreparable injury.

You expressly agree
that in the event you shall breach any provision of this
contract, we shall be entitled to seek injunctive relief and/or
damages, as we may deem appropriate, in addition to any other
rights or remedies available to us, and we shall have the
right to recoup any such damages resulting from any such
breach from any monies which may be payable to you hereunder.
You hereby agree and do hereby indemnify,
12.
save, and hold us harmless from any and all damages, liabili
ties, costs, losses and expenses (including legal costs and
attorneys' fees) arising out of or connected with any claim,
demand or action by a third party which is inconsistent with
any of the warranties, representations or covenants made
.by you in this contract; provided, however, we shall not
settle any claim which would result in your liability of more
than Two Thousand Dollars ($2,000) without your prior written
consent.
You agree to reimburse us, on demand, for any
payment made by us at any time with respect to any such

damage, liability, cost, loss or expense to which the fore

going indemnity applies.
We shall notify you of any such

AA 00014

claim, demand or action promptly after we have been formally

advised thereof, and you shall have the right, at your option

and sole expense, to participate with counsel of your choosing

in the defense of such claim. Pending the determination of
any such claim, demand or action, we have the right, at our
election, to withhold payment of monies otherwise payable to
you hereunder in an amount equal to the total of such claim,

plus estimated legal costs and attorneys' fees, unless you

post a surety bond with a reputable bonding company in an

amount equal to the total of said "claim, plus estimated legal

costs and attorneys' fees. In the event no legal action based
upon a claim is commenced within one (1) year after such claim

is made, we shall release any monies otherwise payable to you

which we have withheld in connection with such claim.
13.

(a)

In the event you shall fail to fulfill

your recording commitment for the initial term or any renewal

term hereof at least ninety (90) days prior to the expiration

of such term, then, unless we shall notify you to the contrary

in writing, such t'erm shall automatically be extended for a
period of ninety (90) days from and after the date on which
you shall have fulfilled your recording commitment therefor.

Nothing contained in this subparagraph (a) shall in any way

limit any of our other rights or remedies in connection with

your failure to record Masters hereunder as and when required

or to perform any of your other obligations hereunder. For
purposes of this subparagraph (a), you shall be deemed to have

fulfilled your recording commitment for any such term only at

such time as all such Masters comprising your recording
commitment for such term, recorded in all respects in accor
dance with the terms and provisions hereof, shall have been

delivered to and accepted by us as set forth in paragraph 2(d)

hereof.

(b)

We shall have the right, at our election,

to suspend the running of the term of this contract and our

obligations hereunder (except for payment to you of royalties

with respect to previously recorded Masters) upon written
notice to you if for any reason whatsoever your voice or your
ability to perform as an instrumentalist shall become impaired
or if you shall refuse, neglect (in which case we may suspend
our obligation to pay royalties), or be unable to comply with
any cf your obligations hereunder, or if as a result of an act

of God, accident, fire, labor controversy, riot, civil commo

tion, act of public enemy, law enactment, rule, order, or act

of any government or governmental instrumentality, failure of

technical facilities, failure or delay of transportation
facilities, illness or incapacity, or other cause of a similar
or dissimilar nature not reasonably within our control or
which we could not by reasonable diligence have avoided, we
are hampered in the recording, manufacture, distribution or

sale of phonograph records or our normal business operations

became commercially impractical. Such suspension shall be for
the duration of any such event or contingency, and, unless we
-15-

AA 00015

notify you to the contrary in writing,-the term hereof

(whether the initial term or any renewal term hereof) during

which such event or contingency shall have commenced shall

be automatically extended by such number of days as equal

the total number of days of any such suspension. During any
such suspension you shall not render your services as a
recording artist to any other person, firm or corporation.
Notwithstanding the foregoing, in the event any such suspen
sion shall exceed six (6) months, unless caused by your
breach hereunder or a condition affecting a substantial

portion of the United States recording industry, either you

or we may terminate the term of this agreement by giving
written notice

to

such effect.

(c)
in the event your voice or your ability
to perform as an instrumentalist shall become impaired or
if you shall be unable, due to illness or other factors beyond
your control in excess of sixty (60) days, or in the event you
shall refuse or neglect to comply with any of your obligations
hereunder, then we shall have the right, at our election, in

addition to any other rights or remedies which we may have in

such event, to terminate this contract upon written notice to
you and shall thereby be relieved of any and all obligations
hereunder except our obligations with respect to Masters
recorded hereunder prior to such termination.
14.

You shall, upon our request, appear on dates

and at film studios or other locations designated by us

upon reasonable notice to you for the filming, taping or
other permanent fixation of audio-visual reproductions of
your performances. In connection therewith, we or our desig
nee will make a payment to you for the services so performed
by you within a reasonable time after the completion thereof
at the rate of applicable union scale, which such payment

shall constitute an advance recoupable from royalties earned

by

you hereunder.

15.
We shall have the right, at our election,
to assign any of our rights hereunder in whole or in part,
to any subsidiary, affiliated or related company, or to any
person, firm or corporation owning or acquiring a majority of
our stock or assets so long as such party assumes all of our
obligations hereunder. You shall not have the right to
assign any of your rights hereunder except the right to
receive royalties.

16.
All notices to be given
all statements and payments to be sent
be addressed to you at the address set
hereof or at such other address as you
writing from time to time, with a copy
Esq., Irell and Manella,

to you hereunder and

to you hereunder shall
forth on page 1
shall designate in
to Harley Williams,

1800 Avenue of the Stars, Suite

900, Los Angeles, California 90067, and a copy to John

Simonds, 3932 Cumberland Avenue, Los Angeles, California
AA 00016
_i s_

90027,

All notices to be given to us hereunder shall be

addressed to us at the address set forth on page 1 hereof or

at such other address as we shall designate in writing from

time to time, with a copy to John E. Mason, Jr., Esq., Mason
and Sloane, 9200 Sunset Boulevard, Suite 505, Los Angeles,
California 90069.
All notices shall be in writing and shall
either be served by personal delivery (to an officer of our
company if to us), mail, or telegraph, all charges prepaid.
Except as otherwise provided herein, such notices shall be
deemed given when personally delivered, mailed or delivered
to a telegraph office, all charges prepaid, except that
notices of change of address shall be effective only after
the actual receipt thereof.
17.

(a)

This contract sets forth the entire

understanding of the parties hereto relating to the subject

matter hereof.

No modification, amendment, waiver, termina

tion or discharge of this contract or of. any of the teems or

provisions hereof shall be binding upon either of us unless
confirmed by a written instrument signed by you and a duly
authorized officer of our company.
No waiver by you or us of
any term or provision of this contract or of any default
hereunder shall effect your or our respective rights there
after to enforce such term or provision or to exercise any
right or remedy in the event of any other default., whether or
not

similar,

(b)

If any provision of this contract shall

be held void, voidable, invalid or inoperative, no other

provision of this contract shall be affected as a result

thereof, and, accordingly, the remaining provisions of this

contract shall remain in full force and effect as though such
void, voidable, invalid or inoperative provision had not been
contained

herein.

(c)

Neither of us shall be deemed to be

in

breach of any of our respective obligations hereunder unless

and until the other shall have given specific written notice
by certified or registered mail, return receipt requested, of
the nature of such breach and the party receiving notice shall
have failed to cure such breach within thirty (30) days after
receipt of such written notice.
(d)
Nothing herein contained shall constitute
a partnership or a joint venture between you and us. Neither
party hereto shall hold itself out contrary to the terms
of this paragraph, and neither you nor we shall become liable
for any representation, act or omission of the other contrary
to the provisions hereof.
This contract shall not be deemed
to give any right or remedy to any third party whatsoever
unless said right or remedy is specifically granted by us in
writing to such third party.

-17AA 00017

(e)

The provisions of any applicable collec

tive bargaining agreement between us and any labor organiza

tion which are required by the terms of such agreement to be
included in this contract shall be deemed incorporated herein
as if such provisions were expressly set forth in this
contract.

(f)

In the event of any action, suit or

proceeding arising from or based upon this contract brought by

either party hereto against the other, the prevailing party
shall be entitled to recover from the other its attorneys'
fees

in connection

therewith

in addition to

the costs of such

action, suit or proceeding.

(g)
Except as otherwise provided in this
contract, all. rights and remedies herein or otherwise shall be

cumulative and none of them shall be in limitation of any

other right or remedy.
(h)

This contract has been entered into in

the State of California, and its validity, construction,

interpretation and legal effect shall be governed by the laws
of the State of California applicable to contracts entered into
and performed entirely within the State of California.
(i)

This contract shall not become effective

until signed by you and countersigned by a duly authorized

officer of our company.
18.

As used in this contract the terms "record" or

"phonograph record" shall mean any device, whether now known

or unknown, on or by which sound may be recorded for later
transmission to listeners, whether embodying sound alone, or

sound synchronized with or accompanied by visual images,

including, without limitation, discs of any speed or size,
reel-to-reel tapes, cartridges, cassettes, or other pre
recorded tapes; the term "master recording" shall mean any
original recording of sound, whether embodying sound alone or
sound synchronized with or accompanied by visual images, which
may be used

in the recording, production and/or manufacture

of phonograph records, together with any derivative thereof

(other than phonograph records); the term "selection" shall

mean a single musical composition, medley, poem, story or

similar work; the term "recording costs" shall mean those
costs and expenses referred to in paragraph 3(c) hereof;
the term "deliver to us",

or words of similar connotation used

in connection with master recordings or Masters shall mean

delivery for mastering, to a studio or other facility desig
nated or approved by us, of fully mixed, leadered, sequenced
and equalized 15 i.p.s. two-track master tapes in proper form
for the production of the parts necessary to manufacture
phonograph records therefrom and deliver to us at our offices

in Los Angeles, California, of all consents, approvals,

copy information, credits and other material required by us
to release phonograph records embodying such master recordings
18-

AA 00018

and to manufacture album covers or other packaging thereforthe term "mid-priced record line" shall mean a record line
or label the records of which bear a suggested retail list
price in the country in question in excess of sixty-six
and two-thirds percent (66-2/3%) and less than eighty percent
(80%) of the suggested retail list price in such country
of top-line records on which records of the majority of
our artists are initially released in such country; the term
"budget record line" or "low-priceo~ record line" shall mean a

record line or label the records of which bear a suggested

retail list in the country in question which is sixty-six and
two-thirds percent(66-2/3%) or less of the suggested retail
list price in such country of top-line records on which

recordings of the majority of our artists are initially

released in such country; the term "net royalty" -shall mean
the gross royalty received by us from a licensee in respect
of record sales, less an amount equal to any monies required
to be paid by us in respect of such record sales in the

form of mechanical royalties to the copyright proprietors (or

their designees)

of the musical compositions embodied in such

records; the term "net sales" shall mean gross sales less

returns and credits of any nature; and the term "single" shall
mean a seven (7)

inch or twelve (12) inch 45-rpm record.

Notwithstanding anything contained herein to the contrary, the

royalty rate payable to you hereunder with respect to sales of
records of the so-called "audio-visual" or "sight and sound"
type which are intended primarily for home use, shall be
subject to your and our good faith negotiations at the time of

such sales, taking into account the then current industry-wide

practice with respect to royalties payable to artists with

respect to such sales. Notwithstanding the foregoing, pending

the outcome of any such negotiations, we shall have the right
to exploit said records of the so-called "audio-visual" or
"sight and sound" type.

19.

You hereby grant to us three (3) separate

options, each to renew the term of this contract for a fifteen

(15) month term, such renewal terms to run consecutively begin

ning at the expiration of the initial term, all upon the same
terms and conditions applicable to the initial term except as
otherwise specified herein or in the schedule hereinbelow set

forth.

Each option shall be deemed automatically exercised

unless we give you written notice of our election not to

exercise such option prior to the commencement of the renewal
term for which such option is to be exercised, unless such
renewal term immediately follows a term which shall have
been extended pursuant to paragraph 13(a), in which event the

option for such renewal term shall be deemed exercised by us

at

any time on or

before its commencement.

-19-

AA 00019

SCHEDULE

Royalty Rates

Maximum Number
of

Masters

Under P.6(b)

to

Renewal

be Recorded

Royalty Rates

Term

Under p.2(a)

Under P.6(a)(i)

U.K., Japan,
Canada

Australia

Other
Territories

1st

Two

(2) LPs

10%

9%

6%-

5%

2nd

Two (2) LPs

.10%

9%

6%

5%

3rd

Two (2) LPS

10%

9%

6%

5%

The royalty rate applicable to any Master shall be the royalty

rate applicable to the term hereof during which the recordingof such master commenced.

20.

Notwithstanding anything to the contrary set

forth herein, your royalty rate hereunder pursuant to subpara

graph 6(a)(i)

with respect to each individual album herein

shall escalate when aggregate net sales through normal distri

bution channels in the United States of such applicable album
(computed separately album by album)
(1,000,000)

shall exceed one million

units as follows:

Units at Full Royalty

Royalty

1,000,001 through 2,000,000

10.5%

2,000,001 on

11%

Said escalated royalty shall be

the individual album and solely
normal distribution channels in
escalation shall not affect the

payable solely with respect to

with respect to sales through
the United States (i.e., said
royalty rate payable in

connection with all other types of sales).

21.

You shall be solely responsible for and shall

pay any and all royalties or other sums which may be payable
to any producer of the Masters in respect of the recording and

-20-

AA 00020

production thereof,

the inannf^(-i,r0

records embodying such Masters and T

-.

tl* f Phono<3^Ph

the
Masters.
tained
herein,Not2i"staS"|%;Sjn!Vtrn?10itati0n
we may (but we sh^l Lt be oblLat^d'toT f
you, of rovaltip^ r nt-hQ,

payment oy us, rather than

producer
"ries^crafs^^S^^oroKIaS^H10
SUh
the
selection
of
any
produce?*^"(,."
eTmsInd"condUionl'"
of any agreement with any producer .h.ii k.
u"
ns

and our mutual approval? Yn such Lint J',!" f J' to youT

right to deduct aPnPy royalt res^a^fby Ts c" y^uV*

sis:.' ii:-^,:^,,-!!:?:^;K?tfiSi "x;1""

payable to you hereunder,

66S frm an^ monies

^2*
(a)
We shall, provided von ar& n*t- *.
time in material
breach
of this cc^ac^or anj pari ^

inlttal
te6^r
releaSf
in. the
United
States'during
initial
term, a/^
minimum
of one
(1)
"sinolA"
an^
A ,? the
,
for the onniuaUnn
- j j
l '
=>J.ngxe
and one (1) LP
l;l.cne equivalent), and durinq each renpwai *-*rr

option therefor, a minimum of two

o\ r no

;f

, or

'""?=""
ith ">.such
tS/and
s?onfSereoatoreSPe"S
enable
us to satisfy
release pfov
commitment
' t0
(b)

in the event that dUrina the fnfn,i

term or any renewal term hereof we shalflito rJlt

-gltsn:.Tma1f:\-u- -^t" eCe?^

Ff^- -

within fifteen (15) days after the anj of 'such tL 'J^",

your desire that this contract be te?miated It 11 H within sixty (60) days after our releiP?or s,,5h L?? '

orre^d""
Jn"
^
e^f^f1="
"^'"'"^
said sixty .so1? & : h j ^ s to1^:witMn
t...sucph r.l..j.t:i;h?r:;ii; ..St$h?6,raVP.&i: :ii
.o i_

AA 00021

by any member or members of the group shall, at our election,

be deemed a breach by the entire group. You hereby represent
and warrant that you have the exclusive right to utilize the
professional name Survivor and that you have taken or will
take all possible steps to legally protect said name. You

agree to indemnify us with respect to any and all liabilities,

including attorneys' fees, which we may suffer as a result of

the exercise of our rights hereunder utilizing said name.

(b)

in the event any individual member of the

group shall, during the term hereof, cease to be an actively

performing member of the group (any such individual being

hereinafter sometimes referred to as a "Leaving Member"), you

shall promptly give us written notice thereof by certified or
registered mail, return receipt requested. You shall, at our

election, designate a replacement member for such Leaving

Member and we shall have the right to approve any such reolacement member, which approval we shall have the right to with
hold for any reason. You shall cause any such individual so
approved by us as a replacement member to be bound by all of

the terms and provisions of this contract, and you shall, upon
our request, cause such individual to execute and deliver to

us such documents as we may deem necessary or expedient to

evidence such individual's agreement to be so bound.

Pending

such individual's execution and delivery to us of any such

documents, we shall have no obligation to pay you any amounts
which would otherwise be payable to you hereunder,
(c)

We shall have the irrevocable option

to utilize the exclusive recording services of any Leaving

Member.' Such option may be exercised by us by written notice
given to such Leaving Member at your address hereunder no
later than ninety (90) days after the date upon which we shall

have received the written notice required to be served by you

pursuant to subparagraph (b).

if we shall so exercise such

option with respect to any such Leaving Member, such Leaving

Member shall be deemed to have executed an exclusive recording
contract with us pursuant to which such Leaving Member agrees
to render his exclusive recording services to us on the same

terms and provisions specified herein with respect to you,

except as hereinafter provided:

(i)

the term of our exclusive recording

contract with such Leaving Member shall be for an initial term

of one (1) year, commencing as of the date of our such written

notice to him pursuant to subparagraph (c) above, and we shall

have such number of separate irrevocable options as equal the

number of renewal options remaining hereunder pursuant to
paragraph 19 above as of the date such" individual shall have
become a Leaving Member, but in no event shall the number of

options be less than two (2). Each option shall give us the
right to renew such term for one (1) year. Such renewal terms
shall run consecutively beginning at the expiration of'such

23-

AA

00023

initial term, all upon the same terms and provisions appli

cable to such initial term.

Each such renewal option may be

exercised only by our giving such Leaving Member written

notice

(at your address hereunder or at such other address of

which such Leaving Member shall have notified us in writing)

at least thirty (30) days prior to the commencement of the
renewal term for which such renewal option is exercised;

(ii)
during such initial term and each
such renewal term, such Leaving Member shall record four (4)
master recordings embodying his performances, plus, at our

election, additional master recordings embodying his perform

ances, but in no event shall such Leaving Member be required
to record in excess of twenty (20) master recordings
during such initial term or any such renewal term.
(d)
Notwithstanding any of the foregoing, in
the event any member of the group shall be a Leaving Member or
in the event the group shall completely disband, we shall have
the right, at our election, in addition to all of our other
rights or remedies which we may have in such event, to termi

nate this contract by written notice to you and shall thereby

be relieved of any and all obligations hereunder except our
obligations with respect to Masters recorded hereunder prior
to

such termination.

In the event we

elect to so terminate

this contract, subparagraph (c) above shall be deemed'appli

cable to each member of the group as if each such member were
a Leaving Member.

(e)
In the event any member of the group shall
become a Leaving Member, such Leaving Member shall not have
the right thereafter during the term hereof to use any profes
sional name utilized by the group or any name similar thereto.

(f)
Any royalties payable under any such
Leaving Member Agreement may be utilized by us to recoup such
Leaving Member's pro rata share of any and all advances and
charges against royalties hereunder.

(g)
At our request, you shall cause any such
Leaving Member to execute and deliver to us any and all
documents as we may reasonably deem necessary or expedient to
evidence the foregoing, including, without limitation, an
exclusive recording contract with us relating to his services.
25.
You agree to enter into a Co-Publishing
Agreement with Ben Scotti Promotion, Inc. d/b/a Saber Tooth

Music (BMI) and SCOTT-TONE MUSIC (ASCAP) (which agreement is

a material condition of this agreement) as soon as reasonably
possible pending obtaining the release of all of the undersigned
members from any preexisting publishing and/or songwriting
commitments. You specifically understand that, pending your
execution of such co-publisher and songwriter agreements with
-24-

AA

00024

Ben Scotti Promotion,

inc. no monies or other consideration

shall be required to be expended by us hereunder.
You and we

each agree to negotiate the terms of such agreements in good

fa ith.

If the foregoing correctly reflects your under

standing and agreement with us, please so indicate by signing

below.

Very truly yours,

SCOTTI BROTHERS RECORDS, Lift?,

AGREED AND

ACCEPTED:

DENNIS KEITH JOHNSON

FRANK

**_/

^P^ 41\

'ROBERT^SA^Y SM^fH

-2 5AA

00025

Exhibit

/
t&uccessor-ln-interesi: to Scotn nrl ~
fe<
Boulevard
,
Bro* Rcorda. --nc.j
me i
21 w Pico
^114

Santa Monica, California Q405

As of Juna , 1933

Messrs. James M. Peterik, David Wavn,

Bickler, and Prank Sullivan 111 *
p/k/a -Survivor"
"xv*" "I
c/o Gerald Margolis, Esq.
MARGOLIS, BURRILL 4 BESSER
1901 Avenue of the Stars, Suit., Rfta

Los Angeles, California 90067

?i_8cottljBrother. Industries, ic ^Survivor1* ~

________"

Gentlemen:

The following shall.set

i-k,. terms
*set forth
torth the
and conditions
.

5ii^9-^c^eS^IlL-be^weejn_Seoiti -

Brothers Record., i.7^-.aic..io,-l-lnt.r..t to Scott ~

Bros. Xndustries. lne, .d yoU; the ^^^ ^ ^^
CSurvivor-1 dated NoveBber 7, ,.

' 1978' as Previously (mended

the new record^ 10reeent ,,.. Suiyor ^ ^

Bros. IntetrlM, Inc euccesSor-in-int6rest to Scotti
Bros, Records, Inc

~
inc. /c^^tfc<scotti Bros.-)
as provioed herein

this Agreement"), wnich agreement shall

be aSl
onaxi. oe a successor
agreement to the Present Contract
... ,

Ct"

An *

A11 ^ms used herein

(including, without limitation -v, .

.a.
m
itat!0n' th* terms^ -album-, "delivery-,
advance.- and -record') ,hall have
in t-h* *

in tne Present Contract-

contra w

contrary herein.

i*

neanings set forth

'acc< unless SDecifimii,,

,
BPeculcally provided
to the

\
\

AA 00026

./

s:
t

1.

Albums and tarmi

(a)

The Survivor album now basing recorded

(the -New Album") shall be deemed the last album required to

be delivered pursuant to th# Present Contract; provided,

however, that the royalty rates applicable to the New Album
hall be those as set forth in paragraph 3 hereof and

further provided that the amounts and payment schedule with

respect to the recording fund for the New Album shall be as

set forth in paragraph 2(b) of this Agreement.

In all other

respects, however, the New Album shall be deemed an album

delivered pursuarvtT'to the Present ContracF.
(b)

"

"""

The term of this Agreement ("Term") shall

commence on the day following the date of delivery to Scotti

-Br-os^-ofthe-Sew-AlbuB and aha4-4~c^nti4uie-AWtJ4^-c^-4um4r-ed

"twenty (120) days after delivery by Survivor to Scotti

Bros, of the last album, if any, for which Scotti Biros,

shall have exercised an option pursuant to paragraph

1(c) hereof.

(c)

During the Term of this Agreement, Scotti

Bros, shall have six (6) separate, independent, and succes

sive options to require Survivor to record and deliver one

(1) album with respect to each such option exercise (such

albums are collectively referred to as the "New Agreement

Albums"). Each of the New Agreement Albums, if any, shall

be delivered during the twelve (12) month period commencing
the day after delivery of the immediately preceding album

-2-

AA

00027

5
Isuch immediately preceding album with raspect to the first
New Agreement Album, if any, shall be the New Album). The
option with raspect to each of the Kw Agreement Albums

hall be exercised by Scotti Bros., if at all, |n writing

within one-hundred twenty (120) days after initial release
of such immediately prior album or o^ne-hundred ighty<l80>
days after delivery of such immediately prior album, which
ever shall first occur. All records (albums and singles)
and master and other tapes in connection therewith delivered

^during the Term shall be the property of Scotti Bros., and

shall fce'subje^-Eo-S^iT^^
as set

th in the Present Contract.

ances and recording funds;

of Pour Hundred Thousand Dollars ($400~,000.00) promptly

following the execution hereof, which amount shall represent
royalties due with respect to the accounting period ended

December 31, 1982, acopy of the stateraent for which period

U attached hereto as Exhibit "A Such statement shall be
subject to Survivor's rights of examination, objection and
audit as provided in the Present Contract. To the extent

such payment is in excess of such royalties, such payment

shall be an advance against Survivor's royalty earnings
pursuant to this Agreement and pursuant to the Present

Contract; provided, however, that Scotti Bros, shall have

the.right to charge against such payaent any and all advances

~3~

AA 00028

, $

or other payments (other than payments of recording costs

with respect to the New Album) made to Survivor or on behalf

of Burvivor subsequent to the close of the accounting period

ndad December 31, 1982 and prior to the axecution hereof. -

An additional One Hundred Pifty Thousand Dollars ($150,000.06)

shall be paid as an advance, promptly following the execu
tion hereof,

(b)

Promptly after delivery of the New Album,,/-/

Scotti Bros, shall pay to Survivor Four Hundred Thousand

Dollars (5400,000.00), representing the approved recording

fund advance for the New Album, less the amount of recording
costs and other advances paid ou.t _by or charged to CBS

Records ("CBS") and/or Scotti Bros, with respect to such New

Album.

"

(c)

(i)

The recording fund for each New Agree

ment Album, if any, shall be determined pursuant to'the

following formula:

Each respective fund shall be an amount

in dollars equal to the average United States net units sold

through normal retail channels ("USNRC Sales") for the two

(2) immediately preceding Survivor albums (or equal only to

such units sold for the immediately preceding Survivor album

if (A) the USNRC Sales for the immediately preceding Survivor

album are lower than for the Survivor album prior to such

immediately preceding such album, or IB) if there is only

one preceding Survivor album), computed according to CBS'
monthly artist trial balance accounting statement, after

"4"

AA 00029

provision for thirty percant (301) ra.erve. for returns and

credits (and there shall be no other deductions for

reserves and credits in tha calculation of such fund),

computed as of the diliwy data of ue appropriate album
(or the latest contractual date for delivery, if actual

delivery has not yet taken place upc~n such date), provided
that neither of the albums entitled, respectively, "Premo

nition" and -Eye of the Tiger', .hall be used in making the

calculation for the New Agreement Album, if any, immediately

following the New Album (so that the calculation for the

first New Agreement Albu71T^yTTh-ir"brbi..d"only upolT

the sales of the New Album). Notwithstanding the foregoing,
however, any recording fund as so calculated shall in no
~c*s*^c**<3'-ve~Httndred -Thousand-^o^i^r^-i^^^r^m^m^-^n-t^

respect to any one album or be less than Two Hundred Fifty

Thousand Dollars ($250,000.00) with respect to any bne
album.

(ii)

Payment of One Hundred Twenty-Five

Thousand Dollars ($125,000.00) of the fund for each album

will be made promptly after the commencement of recording of

the appropriate album and Survivor's notice to Scotti

Bros./CBS of such commencement. The balance of such fund,

as calculated pursuant to the formula set forth in sub-

Paragraph 2(c)(1), less recording costs (which shall be paid

by Scotti Bros, or by CBS) and other advances, will be paid

promptly after delivery of the respective album and receipts,
-5-

AA 00030

if any, showing payment of applicable recording costs.

(iii)

The recording fund formula provisions

et forth in this paragraph 2(c) shall be applicable only if

Survivor has timely fulfilled all of its material obliga
tions pursuant to this Agreement (and provided that the New

Album shall be delivered within ten-flO) days of execution

hereof)? provided, however, that solely for purposes of

determining if Survivor has timely fulfilled all of its

material obligations pursuant to this Agreement and pursuant

to the Present Contract, delivery by Survivor of an album

within fourteen (l^Fmonths after~~the "date of delivery "of

the immediately preceding Survivor album shall be deemed

timely.

In the event all of such material obligations have

--not-bewv-tAaely-failfl^led, the-uad-oe-tlie-appIlcablje
album shall be Two Hundred Fifty Thousand Dollars
($250,000.00).

3.

Royalty rate:

^c^isr&saie!o thc New

Album^and continuing with respect to all Survivor albums

thereafter during the Term, the basic U.S. royalty rate for
USNRC Sales of albums shall be increased from the retail-

based royalty rate set forth in the Present Contract to a

base royalty rate of Twenty-Three and Nine-Tenths Percent

-(23.91) of CBS' wholesale price from time-to-time, based on

Ninety Percent (90%) of such USNRC Sales of albums. with
respect to USNRC Sales of albums in excess of One Million

-6-

AA 00031

(1,000,000) units, such basic U.S. royalty rate .hall be

increased to Twenty-Four and Four-Tenths Percent (24.4%) of

CBS- wholesale price from time-to-time, based on Ninety

Percent (901) of such sale,. If, durlng th. Tera Qf ^
Agreement, Scotti Bros, renegotiates its distribution

agreement and secures an increase in" the U.S. album royalty

rate payable to Scotti Bros, with respect to records

which include Survivor records, fifty percent (501) of any

uch increase will be passed on to Survivor a. an increase
in the appropriate U.S. royalty rate payable to Survivor'
hereunder. - --- '

:..

...

(ii) Commencing with sales of non-album

records embodying masters embodied on the New Album, the

-bAJL!._royaUy^^

shall be Eighteen and One-third Percent (18.33%) of CBS'

wholesale price from time to time, based'on Ninety Percent
(901) of such USNRC sales of non-album records.
(iii)

Commencing with sales of the New

Album, with respect to all album sales in the United

States, royalties to Survivor will be computed, adjusted,

paid, and accounted on the same basis as royalties are
computed, adjusted, paid, and accounted from CBS to Scotti
Bros, pursuant to the production-distribution agreement

between Scotti Bros, and CBS, including without limitation

that Survivor will receive from Scotti Bros, the same

benefit, that Scotti Bros, receives from CBS with respect to

7-

AA 00032

<c

recoupment policy, concerning, for axample (and without

limitation), tour support or other expenditures, provided,

however, that Survivor's royalty rate shall be expressed as
a percentage based on CBS' wholesale price from time-totime, on ninety percent (90%) of USNRC Sales.

(b)

Commencing with sales of the New Album

and continuing with respect to all Survivor albums there

after during the Term, the basic royalty with respect to

sales outside the United States will be, rather than that

set forth in the Present Contract, the following:

Til"""With"respect "to" sales 6T albums In

Canada, seventeen and seventy-eight hundredths percent

(17.78%) of the wholesale price as calculated by CBS with

^specJ^Q_^oj;JtL_rj3i;^j^

based on ninety percent (90%) of "such sales;

(ii)

With respect to sales of albums in

Germany, Austria, Switzerland, Japan and Southeast Asia,

six percent (6%) of the suggested retail price from timeto-time used by the applicable Scotti Bros, distributor with

respect to the Scotti Bros, in connection with such records,

based on ninety percent (90%) of such sales; and
(iii)

With respect to sales of albums in

territories of the world other than the United States,

Canada, Germany, Austria, Switzerland, Japan and Southeast

Asia, fourteen and forty-four hundredths percent (14.44%) of

the wholesale price as calculated by the applicable Scotti

-8-

AA 00033

'3

Mros. distributor with respect to the Scotti Bros, in

connection with such records, based on ninety percent (90%)

of such

sales.

(lv)

-With raspect to sales of non-album

records in territories of the world other than the United

States, the basic royalty shall be the product of (A) the

royalty rate applicable with respect to album masters in the

applicable territory and (B) the ratio of (aa) the royalty

rate pursuant to paragraph 3(a)(ii) hereof for USNRC non-

album records in the United States to (bb) the royalty rate

pursuant to subparagraph 3(a)(i) hereof with respect'to

albums in the United States (for purposes of such calcula

tion, if the relevant rates are computed on different bases

"wholesale" and another is a rate based on 'retail"], all of

such variables shall be converted to penny rates).

By way

of example, if the royalty rate payable to Survivor with

respect to sal*s of albums in Australia were Fourteen

Percent (14%), and the royalty rate payable to Survivor with

respect to sales of albums in the United States were TwentyFour Percent (24%), and the royalty rate payable to Survivor

with respect to non-album sales in Australia were Eighteen

Percent (18%), the royalty rate payable to Survivor with
respect to non-album sales in Australia, would be Ten and

One-Half Percent (10-1/2%) (i.e., Fourteen Percent (14%)

multiplied by the fraction equal to Eighteen Percent (18%)

9-

AA 00034

divided by Twenty-Four Percent (24%) or, in numerical form,

(14%) x (181/24%) - (14%) x (.75) - (10.5%)).

The royalties

which are the subject of this paragraph 3(b)(iv) shall be

computed on the same percentage of sales of such records as

Scotti Bros, is paid by its licensees and distributors, on a
country-by-country basis.

(v)

In all other respects, royalties with

respect to territories other than the United States will be

computed, adjusted, accounted, and paid pursuant to the

relevant provisions of the Present Contract, except as may

-specif ically -be -provide-d -to--the -contrarytn *his -Agreement; (c)

If Scotti Bros,

shall during the Term of the

Present Contract or of the New Agreement enter into distri-

bution or other similar agreements with third parties other

than those entities distributing Scotti Bros."* product as of

the date of execution hereof (any such subsequent third
party is referred to herein as a "New Distributor"), the

royalties set forth in this paragraph 3 shall be computed,

calculated and adjusted with respect to Survivor in the same

manner as royalties are so computed, calculated and adjusted

in the applicable agreement between Scotti Bros, and the

applicable New Distributor? provided, however, that the

royalty rates set forth in this paragraph 3 shall be deemed

modified to be an amount equal in pennies to the royalties

payable pursuant to the rates set forth in this paragraph 3.
(d)

Statements and payments, if any, pursuant to

-10-

AA 00035

thii paragraph 3 shall be made by Scotti Bros, to Survivor

at the address set forth at the head of this agreement, or

at such other address ts Survivor may so notify Scotti

Bros., not later than sixty (60) days after receipt by

Scotti Bros., of the applicable statements and payments, if
any, from Scotti Bros.' applicable distributor(s) or

licensee(s); provided, however, that Scotti Bros, shall, to

the extent practicable, use reasonable efforts to render

such statements and payments earlier than sixty (60) days

'f.**-f_.*_lpt by Scotti Bros, of such statements and payments.

4.
Recoupment; Scotti Bros, shall have the right to
recoup all advances paid to or on behalf of Survivor as set

forth herein, as well as any other advances, whether past,

present or future, paid to or on behalf of Survivor, against
record royalties payable to Survivor pursuant to the New
Agreement and against the Present Contract (even after

termination of the Present Contract).

Such advances in

clude, without limitation, recording costs and recording

fund payments paid to or on behalf of Survivor with respect

to any Survivor recordings, whether past, present or future.
5.

Payments;

All payments as set forth herein

shall be made to Survivor directly by Scotti Bros., except

that if, in any particular instance, Survivor is able to

secure CBS" agreement to make any payments of royalties,

recording funds or recording costs herein directly to

Survivor on Scotti Bros.* behalf, and provided that Survivor

AA 00036

is not then in material breach of any of its obligations,

representations, warranties, covenants, or agreements as set

forth in the Present Contract or the New Agreement, then

Scotti Bros, will agree to permit in such instance such

direct payment to Survivor, but only to the extent that

Survivor's royalty account with Scotti Bros, is then in a

recouped position.

In other words, if all other conditions

set forth in the previous sentence are satisfied in a

particular instance, Scotti Bros, will permit CBS to pay

directly to Survivor the royalties or recording funds as
determined pursuant to this agreement, provided that CBS

shall, prior to making such direct payment to Survivor,

first pay to Scotti Bros, from such monies an amount

^-qxraltt?-thetheTr=T3nTetrouped~-balance of SurvrvcTr^Tsr-royalty
account with Scotti

6.

Bros.

Additional Members:

Survivor agrees to cause all

other persons performing musical services as part of or to

Survivor, on other than a "sideman" basis, including without

limitation, Marc Droubay and Stephen Ellis, to execute the

inducement letters attached hereto as Exhibit "B" (with

respect to Marc Droubay), Exhibit "C" (with respect to

Stephen Ellis), and Exhibit "D" (with respect to any such

persons other than Marc Droubay or Stephen Ellis), and

Survivor further agrees to deliver such executed inducement

letters to Scotti Bros, promptly after the execution hereof.

Such execution and delivery shall be deemed a material
condition of this agreement.

~12-

AA 00037

7*

More rormal Agreementt

The parties hereto

contemplate entering anter into a more formal agreement

incorporating the terms and conditions set forth.herein, as

well as additional terms and conditions commonly included in

recording agreements in the recording industry (including

without limitation terms and conditions concerning such
issues as are addressed and provided for in the Present
Contract), which such additional terms and conditions the

parties agree shall be negotiated in good faith between

thea.

Until such time as such more formal agreement

is entered "int'oV"nQweverT~the" par*t"es~Bpecifica1ly acknowl-"~"

edge and agree that all of the material terms and conditions

of their agreement concerning the subject matter hereof are

^oiitarifiji^e-r^Ln^Aiirl.^-W.lthout- HnHmMnn r%f +^ generality..

of the foregoing, the terms and conditions of the Present
Contract as specifically modified by this Agreement shall

continue to be the terms and, conditions which shall control

the relationship between the parties.

IN WITNESS WHEREOF, the parties hereto have executed

this agreement on this J\*_ day of ^\^

SS~~JJ 2k*3^Jc

SCOTTI BROTHERS INDUSTRIES

INC., BuccessjpxHLn-intejrijBt

to Sco,tti^8f~os,

, 1983.

S M.

PETERIK

fete^fe&P^
FRANK

,:van III

'p/k/a "SURVIVOR'
KAG/35A11

-13-

AA 00038