RMF/2 5 90/3

RE
1.

2. 3.

10.

11.

12.

13.

14.

RMF/25 90/3

Table
bar
lA

of Exhibits
Page Refercnce

2 3 4 5 6 7 8 9

Artist Contracts Assigred to the Joint Venture ...................... 3 Assignment of Bustin's interest in Artist Contracts................ 3 Artist Inducement Letter Re: Bustin's Assigrrment. .. ..... ..... ... 3 M.C. Harnrner's Personal Services Contract ......................... 4 Louis Burrell's Personal Services Contract.......................,.... 5 Manufacturing Agreement between Joint Venture and CRI.... 6 Distribution Agreement between Joint Venture and CRI......... 6 Foreign License Agreement.... .........................7 Forn for Appointment of Management Committee Member.... 9 Artist Contract Form . ... ... .. .. . ..... 15 Security Agreement in favor of Capitol ...... ....... 2L Schedule of Commitments under Bustin' Artist Contracts .. . . . 25 Master Recordings of the Bustin' Artists Assigrred...... .......... %

RMF/2590/3

JOII{T VEI\I'IURE AGREEMENT This Joint Venture Agreement ("Agreement") is made as of the dav of 1990 by and between Capitol BJV, Inc., a ("Capitol") California Corporation on the one hand, and Bustin' Productions, Inc., a corporation ("Bustin"'), Louis Burrell and Kirk Burrell, as individuals (the "Principals"), jointly and severally, on the other hand. Bustin' and each of the Principals shall be referred to hereinafter jointly and severally as "the Bustin' Parties".

RECITALS

A. Capitol's affiliates are actively engaged in the music business throughout the world.
owns certain contracts with recording artists (the "Bustin' Artist Contracts") and the exclusive rights to manufacture and

B. Bustin'

visual recordings.

distribute sound recordings of said artists (the "Bustin' Artists") throughout the world, including their musical compositions, and audio-

C. Bustin' also owns and controls the exclusive rights to the services of Kirk Burrell, pka M.C. Hammer ("M.C. Hammer"), as a producer of sound recordings. D. M.C. Hammer presently is a recording artist under exclusive contract to furnish Capitol Records, Inc. ("CRI") with recordings of his own performances, and he has developed a strong public following, a unique award winning sound, and a successful management team.
hereto desire to form a joint venture between Bustin' Capitol and for the purpose of utilizing the unique talents of M.C. Hammer and the organization of CRI to acquire and commercially exploit additional music properties (described hereinaf;ber) in all media throughout the world for frnancial gain.
NOW, THEREFORE, hereby agree as follows:

E. The parties

in consideration of these premises, the parties

1. Formation. Ownership and Name of the Joint Venture Capitol and Bustin' do hereby form a joint venture (the "Joint Venture") and voluntarily associate themselves to carry on the purpose of the Joint Venture under the name of "Bustit Records." Subject to the other terms and conditions of this Agreement, Capitol and Bustin' each shall own fifty per cent (507o) of the Joint Venture. Any and all property and assets of the Joint Venture as well as all intangible rights, copyrights, trademarks, trade names, licenses, contracts, inventory, master recordings, and Videos (as defined in Paragraph 13(f) below), and all rights
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merchandising and publishing rights, shall be owned by, and the title held in the name of, the Joint Venture. The Joint Venture initially shall maintain its principal office at California.

therein and all forms of exploitation thereof, and all ancillary

2. The Joint Venture Business Purpose

Subject to the terms and conditions of this Agreement, the purpose and business of the Joint Venture shall be (i) contracting for the exclusive services of recording artists (including the Bustin' Artists) to make master sound recordings, and related audio-visual recordings; and (ii) exploiting rights to such recordings throughout the world, including, without linitation, by the sale of audio and video records derived therefrom contracting to make master recordings for the Joint Venture (including the Bustin'Artists) shall be considered a "Joint Venture Artist" with respect to such recordings. The relationship between the parties shall be limited to the performance of the Joint Venture purpose and business according to the terms of this Agreement. The Joint Venture shall have no power to conduct any other business; and, each party covenants to the other that such party shall not engage in any other activity in the name of the Joint Venture. None of the parties to this Agreement shall be deemed or construed to be a partner or joint venturer of the other except for the specific purposes of this Joint Venture. Nothing in this Agreement shall be construed to create a general partnership between the parties, or to authorize any party to bid for or to undertake any contracts for the other party.

(a)

and by means of master use and copyright licensing. Each artist

(t)

Notwithstanding the foregoing purpose and business of the Joint Venture, it is agreed that Capitol (and its afFrliates) may engage in any activity, be retained by or affiliated with any person or entity, or possess any interest, in the music industry aside from this Joint Venture, whether or not such activity, person or interest: (i) is considered to be in competition with the Joint Venture or (ii) may deprive the Joint Venture of any business opportunity; and, neither this Joint Venture nor any of the Bustin' Parties shall have or acquire any right, interest, or control in such activities, or to income or profits derived therefrom.

(c)

3. The Term

"Initial Term"). The Joint Venture shall terminate automatically upon the end the Initial Term unless it is extended pursuant to the terms of Paragraph 3(b) below or terminated earlier pursuant to the terms of this Agreement.
an

upon-(the"EffectiveDate"),anditshallcontinuefor
initial term of three
(3) years from tlle Effective Date (the

(a) Initial Term. The term of this Agreement shall

commence

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the end the Option Period unless it is terrninated earlier pursuant to the terms of this Agreement.

(b) Option Period. Capitol shall have the option, in its sole discretion, to extend the term of this Agreement for a period of two (2) additional years (the 'Option Period") by giving Bustin' notice of such extension within sixty (60) days prior to the end of the Initial Term. If the option is exercised, the Joint Venture shall terminate automatically upon
4. Assiarment of the Bustin' Artist Contracts

Concurrently with the execution of this Agreement, the Bustin'Parties shall assigrr to the Joint Venture all their right, title and interest in the Bustin' Artist Contracts attached hereto as Exhibits 1A through lE. The Bustin' Parties shall cause the Joint Venture to receive good and sufficient title to, and complete ownership of, the Bustin' Artist Contracts, including any and all master recordings made at any time pursuant thereto, and shall execute an assignment in the form of Exhibit 2 hereto. In addition, the Bustin' Parties shall deliver to Capitol an artist inducement letter fully executed by each Bustin' Artist agreeing to the assigrrment of its Bustin' Artist Contract to the Joint Venture, which
inducement letters shall be in the form of Exhibit 3 hereto. The following constitute the professional names of all Bustin' Artists whose contracts and master recordings are being assigrred to the Joint Venture pursuant to Paragraph 4(a) above at the commencement of the Agreement: (i) Special Generation, (ii) Parole (iii) Ho Frat Ho (iv) Too

(a)

(b)

Big MC, and (v) Angela Boyd Early pka B. Angie B. During the term of the Joint Venture, Bustin' shall not negotiate with or sign talent for record exploitation by anyone other than the Joint Venture or Capitol, subject only to the provisions in Paragraph 11(e) hereof with respect to Dropped Artists.

representations and warranties of the Bustin' Parties contained herein, the Joint Venture shall assume and agree to perform and discharge, when

(c) Subject to the full and complete performance by the Bustin' Parties of this Agreement and the truth and accuracy of the

due, all obligations and liabilities of Bustin' under the Bustin' Artist Contracts, but only to the extent that they arise after the Effective Date of this Agreement with respect to matters occurring after said Effective Date.

(d) At its own cost and expense, Bustin' shall perform and satisfy all duties, obligations and liabilities under the Bustin' Contracts which arose before the Effective Date (the "Pre-existing Obligations"), such as for services rendered prior to the Effective Date or for any performance of the Bustin' Parties required to be performed prior to the Effective Date. Neither Capitol nor the Joint Venture is assuming hereby any of the Preexisting Obligations of the Bustin' Parties nor their federal, state, local or foreign taxes of any kind or nature. The Bustin' Parties shall defend, indemnify and hold the Joint Venture, Capitol and Capitol's affrliates

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ha_rmless from and against liability of- the Bustin' Parties.

the Pre-existing Obligations and any tax

Paragraph 4(b) above (the "Roster"). However, Bustin'shall be allowed to add one Artist to the Joint Venture Roster, for each Joint Venture Artist that (i) achieves net U.S. sales in excess of 500,000 "Full Price Units" for a long playrlg album ("LP") released by the Joint Venture, or (ii) is dropped from the Joint Venture Roster. For this purpose, a "Full Priced Unitt ii a record sold in the U.S. through Capitol's normal retail channels, excluding, for example, any records sold: (i) through record club distribution plans, (ii) for export outside the U.S., (iii) at budget line or midline prices, (iv) as premium records, (v) or to the military. Each LP shall contain at least eight (8) master recordings of normal length, with at least 30 minutes cumulative playing time. An artist shall be deemed to have been dropped from the Roster if Capitol notifies Bustin', in writing, that it will not exercise its option to extend the term of said artist's contract, or if the Management Committee (as defined in Paragraph 10 below) determines to drop an Artist from the Roster ("Dropped Artist"). The following acts are currently signed to CRI and are excluded from being added to the Roster: M.C. Hammer, Ace Juice, and Oaktown's 3*5*7. Each artist signed by the Joint Venture shall be required to enter into an exclusive contract with the Joint Venture as described in Paragraph 13(b) hereof.

5. Roster Limitations. Unless Capitol agrees to increase the limit, the Joint Venture shall sign only the frve Bustin' Artists listed in

6. Exclusive Producer

Services of M.C. Hammer

(a) Except as otherwise provided herein, the Bustin' Parties shall cause the Joint Venture to be furnished with the exclusive producer and A&R services of M.C. Hammer on a full time basis, to the best of his ability and skill, during the entire term of the Joint Venture and any extension thereof. Accordingly, M.C. Hammer shall not furnish sucjn services to any other person or entity during the term of this Joint Venture; and he shall be regarded as a key man ("Key Man") under this Agreement. As a material condition precedent to the commencemenf of this Agreement, M.C. Hammer shall execute the inducement letter and a personal seryices contract in the form set forth in Exhibit 4 hereto. (b) Pursuant thereto, the Bustin' Parties shall cause M.C. Hammer personally to produce, to the best of his ability and skill, every master recording on the first album released by each Joint Venture Artisl, and not less than one-half (1/2) of the master recordings on the second and each. subsequent a,lhum of each Joint Venture Artisl. Additionally, the Bustin'Parties shall cause him to perform as the "Executive producer,'for the balance of each such album. In his capacity as Executive producer, M. C. Hammer shall oversee the production of the masters and furnish such other assistance and advice as is customarily furnished by an executive producer. The Joint Venture shall have the right to use M. C. Hammer's name and likeness on the album artwork or credits, and in any
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promotional material concerning the album, or

so,

in its sole discretion.

it

may refrain from doing

For each year of the term of this Agreement, not less than six thousand dollars ($6,000) per annum shall be paid to M.C. Hammer out of acknowledged and agreed that M.C. Hanmer's promised services under this Agreement are special, unique, unusual, extraordinary and of an artistic and intellectual character which has a special value the loss of which cannot be reasonably or adequately compensated in damages in an action at law. Except for his share of the proceeds of this Agreement, which it is acknowledged exceeds six thousand dollars ($6,000) per annum for each year of the term, M.C. Hammer shall not be entitled to receive any compensation whatsoever from Capitol or the Joint Venture for any of M.C. Hammer's services furnished pursuant to this Agreement. For example, and without limitation, M.C. Hammer shall not be entitled to draw any salary or other payment from the Joint Venture, and he shall not be entitled to receive any producer royalty or fee from the Joint Venture or any Joint Venture Artist.

(c)

the Profrt Advances set forth in Paragraph 8 below. It is further

Notwithstanding the foregoing commitments, M.C. Hammer shall devote sulficient time and energy to fulfill all his obligations under his artist recording contract with CRI; and, nothing herein shall be construed or deemed to reduce, modify or change any of the requirements under that contract, including the schedules set forth therein for the delivery of master recordings.

(d)

which cannot be reasonably or adequately compensated in damages in an action at law. Except for his share of the proceeds of this Agreement, which it is acknowledged exceeds six thousand dollars ($6,000) per annum for each year of the term, Louis Burrell shall not be entitled to receive any compensation whatsoever from Capitol or the Joint Venture for any of his services furnished pursuant to this Agreement.

with the exclusive services of Louis Burrell on a full time basis, to the best of his ability and skill, during the entire term of the Joint Venture and any extension thereof. Accordingly, Louis Burrell shall not furnish such services to any other person or entity during the term of this Joint Venture, and shall be regarded as a Key Man under this Agreement. As a material condition precedent to the commencement of this Agreement, Louis Burrell shall execute the inducement letter and a personal services contract in the form set forth in Exhibit 5 hereto. For each year of the term of this Agreement, not less than six thousand dollars ($6,000) per annum shall be paid to Louis Burrell out of the Profit Advances set forth in Paragraph 8 below. It is further acknowledged and agreed that Louis Burrell's promised services under this Agreement are special, unique, unusual, extraordinary and of an artistic and intellectual character which has a special value the loss of

cause the Joint Venture to be furnished

7. Full Time Services of Louis Burrell. The Bustin' Parties shall

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8. Non-Returnable

Advances

(a) Provided that the Bustin' Parties are not then in default in the performance of any of their obligations under this Agreement, Capitol shall pay to Bustin' the sum of One Million Dollars (91,0b0,000.00) wi-thin ten (10) working days after the Effective Date. In addition, if Capitol exercises its option to extend the term of this Joint Venture as allowed in Paragraph 36), and provided the Bustin'Parties are not then in default in the performance of any of their obligations under this Agreement, Capitol shall pay to Bustin' the sum of Two Million Dollars (92,000,000.00) within ten (10) working days after the commencement of the renewal term.
Each of the payments set forth in Paragraph 8(a) above shall be treated as non-returnable advances of Bustin's share of Profrts (the "Profit Advances") in consideration for the promises, representations, and warranties of the Bustin' Parties contained in this Agreement, and in particular (i) for assignment to the Joint Venture of the Bustin' Artist Contracts and (ii) for the full time services (as described herein) of the Key Men throughout the term of this Agreement, each of which comrritments are unique, non-substitutable, and indispensable to the Joint Venture's purpose. Notwithstanding anything to the contrary herein, each of the payments set forth in Paragraph 8(a) above are subject to, and conditioned upon all the other terms and conditions of this Agreement, and the full performance of the Bustin' Parties hereunder, including without limitation Capitol's right of recoupment as set forth in Paragraph 18(d) below.

(b)

9. Manufacture and Distribution

of Joint Venture Recordinss

Joint Venture, and shall be deducted from the distribution income payable to the Joint Venture. The Bustin'Parties acknowledge that manufacturing and distribution will be furnished to the Joint Venture on a non-exclusive basis, similar to the manner in which such services are furnished directly to CRI for its own artists. All day to day adrninistration of the distribution contracts shall be handled by Capitol on behalf of the Joint Venture, including all financial, marketing, sales, manufacturing, merchandising and promotional liaison issues. The administrative duties under said contracts shall be subject to change from time to time in accordance with CRI's requirements, and as Capitol deems necessary or appropriate in the interest of the Joint Venture. CRI shall not be required to perform anything more onerous for the Joint Venture than it performs for comparable artists on the Capitol label of CRI, nor to treat the Joint Venture as a client separate from the Capitol label ofCRI. Capitol shall not be liable to the Joint
(3
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(a) Within the United States. The Joint Venture will exploit its recorded music repertoire in the United States by way of the "Manufacturing Agreement" and "Distribution Agreement" attached hereto as Exhibits 6 and 7. Capitol and Bustin' shall execute said agreements concurrently herewith. The payment of manufacturing and distribution charges and fees, set forth in Paragraph 14 hereof and the Manufacturing and Distribution Agreements, shall be obligations of the

RMF2-5-90/3

Venture or the Bustin' Parties for the failure to achieve any particular level of sales or shipments, nor for any inaccuracies or other defects in the accountings received by Capitol.

(b) Outside the United States. The Joint Venture will exploit its recorded music repertoire throughout the world, excluding the United States, by way of an exclusive license in the form attached as Exhibit 8 hereto ("Foreign License Agreement"). Capitol and Bustin' shall execute said license concurrently herewith. The terms and conditions of the Foreign License Agreement shall be on substantially the same terms as apply to the CRI reciprocal licensing agreement with its EMI Music Worldwide affiliates as the same may be revised or amended from time to time. Such terms shall include, without limitation, the following: (i) No advances; (ii) a net royalty of 2LGVo li.e., a 24Vo all-in rate, less 2.4Vo in consideration of the services of EMI Music Worldwide's International M-arketing Divisionl on l1OVo of the net sales, computed on the respective affrliates dealer price with no packaging allowance; (iii) reduced rate royalties will apply to midline and budget exploitation, consistent with the policies of EMI Music Worldwide then in effect; and, (iv) a term expiring no earlier than six (6) months following the termination of the Joint Venture. Neither Capitol nor its affiliates shall be liable to the Joint Venture or the Bustin' Parties for any failure to achieve any particular level of sales or shipments, nor for any inaccuracies or other defects in the foreign accountings received by Capitol. The Bustin'Parties acknovrledge that the license does not require the foreign associates to distribute any particular recording; and, that such foreign distribution will be furnished tt the Joint Venture on a non-exclusive basis. All contacts with Capitol's foreign associates for the administration of the Joint Venture license shall be handled by Capitol on behalf of the Joint Venture, including all financial, marketing, sales, manufacturing, merchandising and promotional liaison
issues.

The Joint Venture may grant such additional master use, cgpyright and other licenses of master recordings owned by the Joint Venture as shall not be inconsistent with the exclusive rights provided hereinabove in Paragraphs 9(a) and 9(b). 10. The Manasement Committee

(c)

borrow or loan funds. Capitol and the Bustin' Parties shall submit all

(a) Responsibilities. The Joint Venture shall be managed by a committee (the "Management Committee") which shall be responsible for all matters relating to the management and control of the Joint Venture and its business.The Bustin'Parties and Capitol shall report monthly to the Management Committee in such detail and in such manner as any member of the Management Committee reasonably may require. Th'e Managenent Committee shall have the power and the duty to review, and approve or disapprove, all frnancial comrnitments of the Joint Venture in excess of _ dollars, including any decision by the Joint Venture to

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p-roposed contracts

who shall be empowered to execute contracts on behalf of

contracts, contracts, Joint Venture licenses or other grants of -producer rights to third parties by the Joint Venture, emplo5rment contracti, leaees, borrowings, agreements settling any dispute or litigation and similar items. The Management Committee shall establish bne or more bank accounts in the name of the Joint Venture to receive Joint Venture income ald t9 p.ay Joint Venture expenses and liabilities pursuant to the provisions of this Agreement. Any disbursement from a Joint Venture bani< account in excess of shall require the sigrrature of Capitol and Bustin' except Capitol shall have the right to control disbursement of funds it advances pursuant to -, Paragraph 12(a) through 12(g) hereof in such manner as it may determine to verify that such monies are used for the authorized plrrpo-ses hereunder. The Management Committee shall appoint persons

their execution on behalf of the Joint Venture, including ali artist

to the Management Committee for approval prior to

Venture. No contract shall be executed and no Joint Venture funds shall be disbursed in violation of the decisions of the Management Committee.

thj joint Venture, and only such persons shall sign contracts in the name of the Joint

(b) Meetings. Meetings of the Management Committee shall be held quarterly at a time and place mutually agreed by the members of the committee, and at such other times and places as the parties mutually shall d-etermine. A quorum for the transaction of businesi at any meeting
representative of Capitol and one (1) of Bustin'. If any member of the Management Committee, is unable to attend any meeting of the Manage-ment Committee, then the party hereto which he represJnts shall be entitled to appoint another individual to attend such meeting in his place or the absent committee member may appoint a proxy to vote on such member's behalf. If the other members in attendance consent, a member may be represented at a meeting by telephone, and in that case shall be considered to be in attendance at that meeting. All decisions of the Management Committee at such meetings shall require the unanimous vote of the Members present and shall be final and binding upon Bustin' and Capitol respectively. The Management Committee shall maintain minutes of its formal meetings which, when approved by the Management Committee, shall constitute an o{ficial record olits decisions. (c) Emplqf'ees. lxcept as specifically provided in this Agreement, the number of employees, the selection of employees, the hours of labor, and compensation to employees shall be determined by the Management Committee. Or-rJv emnlovees selected or approved Uy ttre Management Committee shall be the employees of the Joint Ventur-e. Except for those part^icular matters specifically reserved to the Bustin' Parties oi Capitol as set forth in this Agreement, the day-to-day operation of the Joint Venture shall be the responsibility of the ManagemlnC Committee, and it shall have the power to delegate any of its responsibilities to the Bustin' parties or Capitol, and to hire third persons to perform such activities, as it
-8

of the Management Committee shall be not less than two (2) members of thb Committee present in person or by proxy, one (1) of whom shall be a

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determines to be necessary or appropriate. Notwithstanding the foregoing, nothing herein shall be construed to give Bustin' or the Joint Venture any control over the persons or entities Capitol or CRI engage to fulfrll their responsibilities hereunder

(d) Appointment of Members. The Management Committee shall individuals duly appointed by Capitol and _ individuals duly appointed by Bustin'. Concurrently with the execution of this Agreement, - each party to the Joint Venture .shall furnish the other with a written statement in the form attached hereto as Exhibit 9, signed by an authorized officer of said party, setting forth the names of the individuals presently appointed to the Management Committee for that party. At any time, by notice in writing to the other, sigrred by an authorized officer for such party, either party may remove any individual it appointed to the
consist of Management Committee, and may replace the person so removed.

11. Resoonsibilities Reserved and Delesated to Canitol

The following responsibilities and duties are reserved and entrusted solely to Capitol. Capitol shall perform all of these responsibilities, on behalf of the Joint Venture, for the fees set forth in Paragraph 14 below. Capitol may delegate all or any part of the performance of any of its duties in this Paragraph 11(a) to 11(g) to CRI.

proper books of account and financial records of the Joint Venture. The and ending (the "Fiscal Year"). Within a reasonable time following the end of each Fiscal Year of the term hereof, Capitol shall furnish Bustin' with an accounting of the affairs of the Joint Venture, including all Profits and Losses thereof, prepared in accordance with generally accepted accounting principles ("GAAP") and the provisions of this Agreement. Such books of account and financial records of the Joint Venture shall be made available to Bustin' to inspect, examine and copy at reasonable times and upon reasonable advance notice; and, Bustin' shall make any objections to the accountings and perforrn any audits of said books as set forth in Paragraph 31 hereto. Bustin' shall furnish Capitol with all documentation and other information in its possession or control to enable Capitol to perform the duties set forth in this Paragraph 11(a). Capitol shall not be liable for any errors or omissions in the books and records, and Capitol may revise such books and records from time to time to correct errors or make other changes deemed necessary or appropriate, without any liability arising out of such changes.

(a) Joint Venture Books and Records. Capitol shall maintain

Joint Venture shall adopt a fiscal year starting

(b) Joint Venture Royalty Accountins. Capitol shall prepare and mail royalty statements to the Joint Venture Artists on a semi-annual basis in accordance with the Joint Venture Artists Contracts, and it shall furnish Bustin' with a copy of each such statement. In addition, Capitol
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shall prepare and n all publisher statements quarterly in accOrdance mth the applicable mecha cal licenses.

(c)U.S.and Foreixl.Dist bution Accoundngs. Within sixty(60)

days following the end of each mOnth ofthe te. ofthis Agreement,Capitol shall submit a monthly statements to Bustin' sho ttng all oint Venture income received and amOunts deducted there6 m (or otherwise charged to the oint Venture)during that month for se_ces furlllshed by Capitol and its attliates.In addidon,Capit01 shall make available to Bustin'copies of reports it receives sho ang shipments tO customers,returns and flnished goods inventottes of oint Venture recordings.

inventory management and Obsolescence of

(d)Inventorv Management.

including any w te off on Oint Venture books fOr Obsolescence.Pursuant thereto,it shall dete ne the quanuty of records tO be manufactured in all conAgurations, and it shall decide when particular recOrdings may be deleted from the current catalog, and s01d as OverstOck, cut Outs, or othermse disposed of by scrapping Or silnilar means.The Bustin'Parties acknowledge that the opumal quantities of records tO manufacture are diFlcult or impOssible to determine,and that neither Capitol nOr CRI shall be liable to the oint Venture or the Bustin'Pardes,under any condition, for any oversupply or undersupply of records Or component parts,or w te in this Paragraph.
rs there l resulting from Capit01's exercise Of its responsibilides set forth

Capitol shall be responsible for oint Venture records,

executed by Bustin'and the Dropped Artist. Such assignment shall be thout warranty of any kind Or nature.In the event Of such assignment, Bustin'(and its nominee,if any)shall assume and be responsible for an manufactu ng, distribution (including accepting all returns Of that Artist's recordings), and a1l other duties with respect to such artist's recordings released thereafter;and,Bustin'shall defend,indemnify and hold Capitol and the oint Venture harmless frOm and against an cost, expense, liability and claims a sing Out Of the assignment and the
continuation of the assigned ardst contract.

(e)Artist Ootions capitol,in its sOle discretiOn,shall decide wlich artist options are to be exercised by the oint Venture,and which shall not be exercised.Upon request from Busun',the oint Venture shall assign to Bustin'(or its nominee)all its ghts and duties in the executory po tion ofthe contract of any Dropped Artist,pro ded Bustin'delivers a full release of Capitol and the int Venture from all executOry obligations under such Dropped Artist's cOntract,in a fo... SatiSfactory to Capitol and

(O Business Attirs and Legal Services.In consideration of the Adnlinistrative Fee discussed below in Paragraph 14(c), Capitol shall furnish the Oint Venture, on a non exclusive basis, with in house

and amendments thereto,to exerdse artist options,to obtain mechanical licenses on oint Venture masters which Bustin'shall cause tO issue from
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Business Arairs and Legal services tO draft oint Venture Artist contracts

RMF/2-5_90/3

accountants, tax advisors and other persons as it determines to be necessary or appropriate in the interests of the Joint Venture, and the cost of doing so shall be an authorized expense of the Joint Venture. All monies advanced pursuant to this Paragraph shall be deemed to be Variable Costs as defined hereinafter in Paragraph 12(d). Capitol may recover all such expenses by deduction from Joint Venture income. Any liability or settlement costs arising out of any claims, suits dr threatened suits against the Joint Venture shall be borne as set forth in Paragraph 2g hereof. Neither Capitol or CRI, nor any employee of either, shall be liable to the Joint Venture or the Bustin' Parties, on any theory, for any inadvertent or administrative error, nor for consequential damages or loss resulting from

the proper parties, to handle any artist audits (but any settlement or liability arising therefrom shall be an expense paid by and liability of the Joint Venture), and for other routine Business Affairs and Legal functions which Capitol determines should be handled in-house. It is the intention of the parties that these activities will be handled by CRI employees with its existing staff; and, nothing herein shall be construed to require Capitol or CRI to hire additional staff for these functions. These services shall be furnished on a schedule determined by Capitol, and shall be subject to the availability of personnel. In the event litigation is threatened or commenced against the Joint Venture, or if legal, tax or accounting expertise is required for the Joint Venture, Capitol may engage such law firms,

its

performance or failure Accounting services.

to perform

Business Affairs, Legal or

advertising of Joint Venture records. All such advertising costs shall be an expense of the Joint Venture and deducted from income. In addition, when authorize4 by the Management Committee, CRI may utilize additional arrounts from Joint Venture net sales revenue for use in co-op advertising, product discounts, free goods, dating and other sales incentive programs.
12. Joint Venture Fundins bv Canitol

(g) Co-oo Advertisine and Incentive Programs. CRI branch sales offices shall distribute the Basic Co-op Advertising Fund (as set forth in Paragraph 12(e) below) to customers in the branches' sole discretion, for

Subject

42 44 45 46 47 48 49
43

performance by the Bustin' Parties of all their duties and obligations under this Agreement, Capitol shall advance the following money as working capital of the Joint Venture to be used solely for the purposes specified herein. Such money shall not be used for, or applied to, any other purpose. All monies advanced by Capitol (except Profit Advances), including any monies different from or in excess of the sums provided in this Paragraph, shall be deemed to be loans to the Joint Venture ("Loan Capital"), and shaU be recoupable by deduction from income of the Joint Venture, as more fully set forth in Paragraph 17(b) below, and the unrecouped portion (if any) shall be repayable at the termination of this Agreement out of Joint Venture assets, as more fully set forth in Paragraph 21 below.

to and contingent upon the full, complete and timely

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more than, the following maximum yearly sums (shown under "Maximum Amount" in the chart below) which may be expended by Bustin' for its general overhead purposes as more specifically set forth in Paragraph 13(a) through 13(j) hereof (the "Overhead Allowances"). The sums shown for years 4 and 5 shall apply only in the event Capitol elects to extend the term of this Joint Venture as provided in Paragraph 3(b) above. Any general overhead expenditure by the Bustin' Parties in excess of the following amounts shall be the sole responsibility of the Bustin' Parties, and they promptly shall pay such expenses when due.

(a) Overhead Allowances. Capitol shall advance up to, but not

l3 t4
15

r6
l'7
18 19

20

2t

22 23

24
25 26 27 28 29

30

3l

32

Year
1

MqvimumAmount
400,000

2 3

4
5

450,0m Prior year allowance, plus a 67o cost of livine increase Prior year allowance, plus a 67o cost of livine increase Prior year allowance, plus a 6Vo cost of livine increase

(b) Marketins Fund. Capitol shall advance up to, but not more than, the following maximum aggtegate sums for marketing and

promotion of each Joint Venture album or single as described in Paragraph 13(c) hereof, but strictly allocated for use as shown under "Authorized Purpose' in the chart below (the "Marketing Fund'). Such Marketing Fund shall not be used to pay salaries of in-house promotion staff or for general overhead expenses, as those items are to be covered out of available Overhead Allowances.

items to promote any Joint Venture album and

cross-over purposes as

(c) Recordine Funds. Capitol shall advance up to, but not more than, the following agg"egate amounts per Joint Venture Artist to be used for actual recording costs, artist advances and producer advances, (the "Recording Funds"). The Recording Funds shall not be used, directly or indirectly, to compensate any of the Bustin' Parties, or any person or entity related to the Bustin'Parties, such as, for example, any person or entity affrliated with any of the Bustin' Parties by common ownership or control, the Principals, their family members, the corporate parents or subsidiary
-12P/1510

RMF/2-5-9013

companies of Bustin', etc. The Recording Fund for the first LP (and any singles released therefrom) of each Joint Venture Artist shall be the sum of one hundred thousand dollars ($100,000). The amount of the Recording Fund for each successive album thereafter shall be equal to two-thirds (2/3rds) of the net royalties accrued on the sale of Full Priced Units of the artist's preceding studio album, computed using the chart below and the formula set forth in Paragraph 3d. of the Artist Contract Form attached hereto as Exhibit 10. Notwithstanding the foregoing formula, the amount of Recording Fund for any Joint Venture album shall not be less than the Floor, nor more than the Ceiling shown in the chart below:

13

t4 l5 t6
20
21

l7 l8 l9

22 23 24 25 26 27 28 29 30

3l
JJ

32 34 35 36 5t 38 39 40
41

and Distribution Agreements attached hereto as Exhibits 6 and 7, Capitol shall arrange for CRI to advance costs of manufacturing and distribution of Joint Venture recordings. In addition, Capitol shall advance monies for the payment of artist royalties, producer royalties, mechanical license fees, AFM Recording and Pension Fund Payments and similar royalties and fees required to be paid on the net sales of Joint Venture recordings ("Variable Costs").

(d) Variable Costs. Subject to the terms of the Manufacturing

(e) Co-op Advertisins Fund. Capitol shall arrange for CRI to advance up to, but not more than, one and one-half per cent (1.57o) of Joint Venture net sales revenue for co-op advertising (the "Basic Co-op Advertising Fund") and such additional monies as may be authorized by the Management Committee for co-op advertising,. discounts, free goods, dating and other sales incentive programs. Any costs of co-op advertising, discounts and other sales incentive programs are expenses of the Joint Venture, which shall be deducted from monthly distribution income.
advance up to, but not more than, fifty thousand dollars ($50,000) to make the First Video for each Joint Venture album; and, up to, but not more than, fifty thousand dollars ($50,000) to make the Second Video for each Joint Venture album (the "Video Fund").

(f) Video Fund. Subject to Paragraph 13(f) hereof, Capitol shall

than, seven thousand five hundred dollars ($7,500) for artwork design cost for each Joint Venture album (the "Artwork Fund").
-13P/1510

(g) Artwork Fund. Capitol shall advance up to, but not

more

RMF/2-5-90R

13. Responsibilities Reserved and Delesated to Bustin' The following responsibilities and duties are reserved and entrusted solely to the Bustin' Parties. The Bustin' Parties shall perform all of these responsibilities, on behalf of the Joint Venture, with respect to each Joint Venture Artist and each Joint Venture recording. The Bustin' Parties hereby promise Capitol that they shall be carried out diligently, in good faith, in a lawful manner, within the authorized financial limits set forth in this Agreement and with the best efforts, energy and skill that the Bustin' Parties possess. The full and complete performance of these

responsibilities by the Bustin' Parties, within the authorized financial limits set forth in this Agreement, and in a timely, effrcient, and businesslike manner, is a condition precedent to the formation and continuation of this Joint Venture Agreement.
customary artist and repertoire activities for the Joint Venture, including, without limitation, locating new recording artists and established recording artists available to be signed by the Joint Venture; selecting which artists should be signed by the Joint Venture within the Roster Limitations described in Paragraph 5 hereof; negotiating with the selected

(a) A&R Activities. The Bustin' Parties shall perform all

artists the principal terms of a proposed contractual engagement by the Joint Venture, including all the standard terms set forth in Paragraph 13(b) below; selecting or otherwise obtaining the compositions and other material for recordings by the artist and causing the requisite mechanical

licenses to be issued to the Joint Venture; developing or otherwise obtaining

prior approval of the Management Committee; obtaining delivery of master recordings to the Joint Venture, free and clear of all claims, together with all customary documentation, information for mechanical licenses, credits, legal releases, artwork and licenses, all in a form approved by Capitol for compilation into records and manufacturing copies of said recordings; and perforrning all other aspects of A&R administration for the Joint Venture recordings.

in Paragraph 6 hereinabove; assisting the artist in all customary ways to produce high quality, commercial master recordings using the Recording Funds provided in Paragraph 12(c) hereof; insuring that the approved budget for each album is not exceeded without
produce each master as set forth

a complete recording budget for Management Committee approval, in advance of the start of any recording project; limiting and controlling all financial commitments and expenditures to those authorized by the Management Committee and this Agreement; causing M.C. Hammer to

Paragraph 13(a) above, shall contain standard provisions, normal in the industry for artists of the stature signed by Bustin', and that each such contract shall include at least the following terms and conditions: (i) the rights granted shall be exercisable by the Joint Venture on a worldwide
-L+

(b) Standard Contract Provisions. The Bustin'Parties represent and warrant that the assigned contracts of the Bustin' Artists referred to in Paragraph 4 below, and each artist contract it negotiates pursuant to

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RMFt2_5_908

basis; (ii) each artist shall be bound to furnish his recording services exclusively to the Joint Venture; (iii) the Joint Venture shall own all master recordings, free and clear of any claims; (iv) each contract shall require delivery to the Joint Venture of, at least, six (6) overcall albums in addition to one album due during the initial term of the recording agreement; (v) the contractual royalty rates payable by the Joint Venture shall not exceed the basic "l,2Vo "all-in' royalty rate, computed, reduced, paid, and not paid, all on the quantity basis and by category, in accordance with CRI's form artist agreement attached as Exhibit 10 hereto ("Artist Contract Form"); and, (vi) at least fifty per cent (50Vo) of video costs advanced pursuant to Paragraph 12(f) shall be recoupable from royalties payable to artists and producers. Any improvements on these terms that Bustin' negotiates shall inure to the benefit of the Joint Venture. All artists contracts shall be in the form of the Artist Contract Form, and shall become binding on the Joint Venture only after the terms of such contract are approved and the contract is fully executed by an authorized signer of the Joint Venture pursuant to the terms of this Agreement.
supervise, all marketing and promotion personal and activities for the Joint Venture (but not including those responsibilities specifrcally delegated to CRI pursuant to the distribution and foreigrr associate agreements referred to in Paragraph t hereinabove, or those responsibilities reserved to Capitol in Paragraph 11 hereinabove, each of which Capitol shall oversee and supervise), including, without limitation, arranging to obtain as much radio airplay, press coverage and other media coverage of Joint Venture Artists and their recordings as is possible using authorized methods and expenditures hereunder. It shall be Bustin's responsibility to work with the Joint Venture Artists to obtain Artist photos, biographical information, personal appearances and other information for press releases, and to develop and shape their public image for the promotion of their records. For this purpose, Bustin' may negotiate reasonable rates and obtain customary promotional work from independent promoters or other outside parties. Authorized expenses incurred by Bustin' for such marketing and promotion activities, up to the limit set forth in Paragraph 12(b), shall be deemed to be Joint Venture expenses chargeable to the Marketing Fund. Bustin' alone shall be responsible for, and shall pay when due, any such expenses in excess of the applicable Marketing Fund.

(c) Marketing and Promotion. Bustin' shall oversee and

Allowance funds to be furnished by Capitol as set forth in Paragraph 12(a)

(d) Hiring In-House Promotional Staff. Using the Overhead

is authorized to hire national director(s) of marketing and promotion for the Joint Venture, and a promotion field staff ofup to six (6) pg6pls in the first year of the term of the Joint Venture, and up to eight people during the remainder of the terrn ofthe Joint Venture, at an average starting salary of approximately $35,000 for the entire marketing and promotion staff discussed in this Paragraph. Such persons shall furnish their full time services to the Joint Venture, solely for promotion of the Joint Venture recordings. Bustin' alone shall be
hereinafter, Bustin' also
P

1510

-1S

RMF/2-5-90l3

responsible for, and shall pay when due, any such expenses in excess of the applicable Overhead Allowance.

(e) Use ofCross Over Funds. If any Joint Venture single achieves top five (5) in the Billboard Hot Black Singles chart and Bustin' determines that single has significant potential to cross over onto the pop charts, Busti!' may consult with Capitol about further advances. If Capitol agrees that the single has such potential, and approves the expenditure in writing, Bustin' may commit additional promotional funds for that single, up to the amounts authorized in Paragraph 12(b) for "pop" cross over purposes.

(f) Video Production. Bustin' may atrange for the production and delivery to the Joint Venture of one audio-visual recording (the "First Video") based upon a single record released from each Joint Venture album, which single shall be selected by the Management Committee. The First Video shall be completed and delivered to the Joint Venture in a timely manner for promotion of the single and the album. If the single featured in the First Video achieves top ten (10) on Billboard's Hot Black Single chart, or if Capitol's net sales of Full Priced Albums exceeds 75,000 records within three (3) months after release of such single in the U.S., Bustin' may arrange for the production and delivery to the Joint Venture of an additional video (the "Second Video") based upon another master recording contained within the album, which recording shall be selected by the Management Committee. The Second Video shall be delivered in a timely manner so that it can be used effectively to promote continuing alb 'm sales. Bustin' shall obtain all videos, free and clear of all claims, and it shall furnish the Joint Venture with all customary documentation, information, credits, legal releases, consents, and licenses, all in a form satisfactory to Capitol. All videos shall be owned by the Joint Venture, including all copyrights therein. It shall be Bustin's responsibility to cause distribution of the videos for promotional airplay, and Bustin' shall fully exploit each Video to achieve the maximum positive sales impact on Joint Venture recordings. Subject to the provisions of this Paragraph, Capitol shall advance the funds for production of videos up to, but not more than, the Video Fund set forth in Paragraph 12(f) hereof. Bustin' alone shall be reslonsible for, and shall pay when due, any such expenses in excess of the
applicable Video Fund.

(g) Album Artwork. Bustin' shall be responsible for obtaining, creating and furnishing all album artwork, including, without limitation, albun cover graphics and mechanical layouts, inserls, liner notes, label copy, film, color separations, credits, clearances, consents and legal releases required by CRI to manufacture albums. Bustin' may utilize the creative services of the Art Department of CRI, on a non-excluiive basis, to assist in preparing suitable album cover art work and point of purchase displays; provided, however, such Art Department services shall be scheduled by Capitol according to reasonable availabilities, Bustin' alone shall be^ responsible for, and shall pay when due, any such expenses in excess of the applicable Artwork Fund.
P/1510

-1&

RMF/25 90/3

(h) Bustin' Accountins Resoonsibilities. Within fourteen (14) days following the end of each month of the terrr of this Agreement, the Bustin' Parties shall submit detailed and complete monthly statements to the Management Qernrnittss, prepared in accordance with GAAP, showing all Joint Venture expenditures and any expenditure commitments made by the Bustin' Parties during that month.
Allowances. The parties hereto plan that the amount of Overhead Allowances to be advanced by Capitol (as provided in Paragraph 12(a)) shall be su{ficient to cover Bustin's general overhead expenses for its Joint Venture activities described in Paragraphs 13(a) through 13(h), inclusive, during the entire term of this Agreement, including all Bustin's expenses for (i) rent and related office expenses, (ii)

(i) Use of Overhead

the salaries, fringe benefrts and related costs of employing national director(s) of marketing and/or prornotion, and (iii) the salaries, fringe benefits and related costs of employing a promotion field staff as referred to in Paragraph 13(d) above. Any shortfall in such allowance shall be made up by Bustin', out of its own funds. Bustin' shall use its best efforts to insure that each of its general overhead expenses actually incurred on behalf of the Joint Venture are reasonable in amount and kind, consistent with the aforesaid plan, and that its yearly total does not exceed the maximum Overhead Allowances for that year of the term. Subject to the foregoing, Bustin' shall be entitled to utilize up to, but not more than, the maximum amount of the Overhead Allowance for each year of the term (set forth in Paragraph 12(a) above), without limitation, for its general overhead costs incurred to perform its duties set forth in Paragraphs 13(a) through 13(h), inclusive. Notwithstanding the foregoing, it is agreed that Overhead Allowances may not be used to pay, directly or indirectly, any salary or
fringe benefits to either of the Principals, which shall be the sole responsibility of Bustin'; and, any such salary or fringe benefits Bustin' pays either of the Principals shall g-Sl be considered a Joint Venture
expense.

6) Billines Submitted to Capitol. To utilize such Overhead Allowance, Marketing Fund, Recording Funds, Video Fund, Artwork Fund, and any other cost or expense to be advanced by Capitol hereunder, Bustin' must submit billings for all covered items for direct payment by Capitol and otherwise comply strictly with the terms of this Agreement. Pursuant thereto, Bustin' shall carefully review all billings to verify they are for authorized services; and, an authorized officer of Bustin' shall approve each of such bills in writing to show the correct amounts to be paid and the particular furrd or funds under Paragraph 12 hereof to which each bill applies. Provided Bustin' furnishes such approved billings to Capitol in a timely manner, together with all required artwork, graphics, credits, consents, clearances, legal releases, licenses and other detail to explain the charges to Capitol's reasonable satisfaction, Bustin' may direct Capitol to pay such approved bills, and Capitol shall advance the funds to comply with such direction, up to the maximum amounts set forth in Paragraph 12
P/1510

-t7-

RMF/2_5_906

above. In the case of recurring expenses or for the convenience of the parties, such as rent and authorized salaries, Bustin' nay arrange for automatic paJrments, or such other reasonable procedures for the advance of funds hereunder as the Management Committee shall deterrnine.
14. Fees Payable to Capitol The following fees are Joint Venture expenses due and payable out of proceeds of the Joint Venture; and, they may be deducted monthly from
possession or control which are owed or payable to the Joint Venture. Such fees shall be payable monthly by the Joint Venture before any Loan Capital is recouped or repaid; and the assets of the Joint Venture shall be allocated for the payment of these fees ahead of all other Joint Venture Expenses.

24 25 26 27 28 29 30
31

32
JJ

34 35

36
3',t

40

38 39

current cash receipts, income, revenue, or other monies in CRI's

(a) Pist4bution-Eees, The Joint Venture shall pay CRI a monthly distribution fee, based on a percentage of annual net sales ("Annual Net Sales') of Joint Venture records, which Annual Net Sales shall be calculated in accordance with the Distribution Agreement attached hereto as Exhibit 7. The following chart shows the applicable percentage of annual net sales to be charged as a distribution fee for each salis tier: AnnualNetSales
First S10 Million 10 Million to 120 Million ;20 Million to 130 Minion

Fee
lSVo

\6Vo

Over$30 Milhon

12%

l44o

manufacturing fees and charges for manufacture of Joint Venture records, at the prices and calculated in accordance with the Manufacturing Agreement attached hereto as Exhibit 6.

(b) Manufacturing Fees. The Joint Venture shall pay CRI all

(c) Administrative Fees. The Joint Venture shall pay CRI a monthly administrative fee (the "Administrative Fee") based on a percentage of Annual Net Sales of Joint Venture records. The following chart shows the applicable percentage of Annual Net Sales to be charged ai
the Administrative Fee for each sales tier: Annual Net Sales
First S5 Million 15 Million tO 10 Million 10 lhon to 15 LIlillion S15 Mlllion to 120 Minion Over S20 Million

Fe
l2%o
lOVo 8Vo

6% 5%

15. Royaltv Payable to Bustin'. For net sales in the U.S. of each Joint Venture album produced by Bustin', Capitol shall pay to Bustin' a royalty (the "Bustin' Royalty") at the
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RMFt2-5_908

of t}re same royalty base applicable to artist royalties under the Artist Contract Form attached as Exhibit 10 hereto. The Bustin'Royalty shall be included within the artist's "all-in" rate, and shall be computed in the manner set forth in the Artist Contract Form. Total royalties payable to the artists, producers, Bustin', and all other parties combined, shall not exceed the applicable "all-in" royalty. Notwithstanding the foregoing, the Bustin' Royalty shall not be earned or payable until after full recoupment by Capitol of all Recording Funds and any other costs advanced for such album. For this purpose, such recoupable "Recording Funds" for any particular album shall be deemed to include, without limitation, (i) all artist, producer and other advances, whether or not directly related to that particular album, (ii) all fees, union scale payments and other sums paid or payable to the artist (and any third party furnishing services of the artist), (iii) all recording costs advanced by Capitol for the applicable masters (as the term "recording costs" is used in the Artist Contrac[ Form), and (iv) all other sums, advanced, paid or incurred by Capitol or CRI with respect to the applicable Artist. Payment of the Bustin' Royalty shall commence with Capitol's first semi-annual accounting to the artist following recoupment of all such "Recording Funds", and shall be retroactive to the first record of the applicable album sold atter Capitol's recoupment of all producer advances for that particular album.
2Vo

rate of

16. Oblisations of Bustin' Parties

The Bustin' Parties shall be responsible for and pay out of their own funds: (i) all costs or expenses required for activities covered hereunder in Paragraphs 13(a) through 13(j), inclusive, in excess of advances due from Capitol under Paragraphs 12(a) through 12(g) hereof (Excess Expenses"), and (ii) any and all expenses and commitments that any Bustin' Party incurs or makes which are not authorized pursuant to this Agreement ("Unauthorized Expenses"). Excess Expenses shall be considered to be Joint Venture expenses to the extent they actually are paid by Bustin' on behalf of the Joint Venture, and shall be added to Bustin's Loan Capital account pursuant to Paragraph 17 below. Bustin' shall furnish Capitol a monthly statement setting forth any Excess Expense incurred in the prior month, together with reasonable documentation thereof requested by Capitol. Unauthorized Expenses shall be Bustin's sole obligation and shall not be considered to be Joint Venture expenses; and, they shall not be recoupable by Bustin' as loans or otherwise. The Bustin' Parties shall defend, indemnify and hold Capitol harmless from and against all liability, cost and expenses for Excess Expenses and Unauthorized Expenses.

17. Working Caoital Loans. (a) Loan Capital Accounts. Subject to the provisions of Paragraph 16 above concerning Unauthorized Expenses and the provisions of Paragraph 29 below concerning settlement costs and liability, any monies provided to the Joint Venture by Capitol or Bustin' shall be treated as Loan Capital, including all advances by Capitol pursuant to Paragraphs 12(a)
-19P/I5 10

RMFI2-5-9OB

showing all increases and decreases therein, and the unrecouped balances of Capitol's and Bustin's Loan Capital as of the end of each month of the term of this Agreement, including therein any Excess Expense for which Capitol has received documentation pursuant to Paragraph 16 hereof. Following the end of the month, Capitol shall furnish the Joint Venture with a monthly statement showing the Loan Capital account balances at the end of the month, and a report showing activity in such accounts for such month.

through 12(g) hereof. Capitol shall maintain Loan Capital accounts

(b) Recouoment of Loan Caoital. At the end of each month, if the Joint Venture has paid all'its current expenses (including, without limitation, all fees payable pursuant to Paragraphs 14(a) through 14(c) to Capitol and CRI hereunder, and the Bustin' Royalty), and it has taken appropriate reseryes for accrued expenses (including, without limitation, all record royalties and mechanical license fees) it shall distribute any
remaining cash on hand ("Net Receipts") to repay Capitol and Bustin' Loan Capital in proportion to the unrecouped balance of their Loan Capital accounts as of the end of the month, up to the balance of their then outstanding Loan Capital account. For example, as of the end of a monthly accounting, if Capitol's Loan Capital balance is $190,000 and Bustin's Loan Capital balance is $10,000, and the Joint Venture's cash on hand (after appropriate reserves have been taken and all current expenses have been paid) is $100,000, the Joint Venture shall apply such casbon hand to repay $95,000 to Capitol and $5000 to Bustin', and reduce their Loan Capital accounts accordingly. Net Receipts remaining after the Loan Capital accounts are fully repaid shall be applied as set forth in Paragraphs 18(a) through 18(d) below.

Joint Venture, at any time, shall mean the excess of current liabilities over current assets, determined in accordance with GAAP and this Agreement. The Profrt Advances provided for in Paragraph 6 hereof shall not be included in any computation of Working Capital Deficiency.
18. Profits and Losses.

(c) Workine Canital Deficiencv. As used in this Agreement, "working capital" shall mean the excess of current assets over current liabilities. For purposes of this Agreement, the aggregate balance of unrecouped Loan Capital plus all other loans to the Joint Venture outstanding at any time, whether or not then due or payable, shall be included in current liabilities. The "Working Capital Deficiency' of the

following the end of each _ of the term of this Agreement, Capitol shall furnish the Joint Venture with a statement of profit and loss, showing net profits or losses for that _ and cumulative profits or losses for the Joint Venture from inception. For this purpose, the Joint Venture shall not book any income until actually received, and appropriate reserves for returns and Joint Venture expenses shall be maintained. Joint Venture
-2U
P/r5r0

(a) lPeriodicl Profrt Determination. Within a reasonable time

RMF/2-5-9013

"Profrts" and "Losses" shall be determined, before income tax, in accordance with GAAP, except as provided herein.
(b) Division of Profits and Losses. Subject to recoupment rights and the other terms of this Agreement, the net Profits and Losses from the Joint Venture shall be split fifty per cent (50Vo) to Capitol ("Capitol's Share") and fifty per cent (SOVo) tn Bustin' ("Bustin's Share"). Notwithstanding the foregoing, and conditioned upon Bustin's firll and complete performance of its duties and obligations under this Agreenent, Capitol will bear the burden of costs and liability to third parties for Bustin's Share of Losses, but only to the extent such Losses exceed Bustin's Share of previously distributed Profits. For example, if Bustin' fully performs its duties and obligations hereunder and the Joint Venture suffers a Loss after some

Profits have been distributed to Bustin', then the parties shall be obligated equally for such Loss up to'the aggregate amount of Profrts previously distributed to Bustin' (from inception of this Agreement), with Capitol alone liable for the balance of such loss, if any. In the event of Losses after a previous distribution of Profrts, Bustin' promptly shall repay to the Joint Venture the portion of such previously distributed Profits required to cover its share of the Losses. Capitol shall not be responsible for reimbursing the Bustin' Parties for Losses, if any, of Bustin's Loan Capital, nor for any Losses resulting from or arising out of any breach by the Bustin' Parties of the term and conditions of this Agreement.

the Joint Venture, if any, in an amount determined by the Management Committee. Profits distributed shall not exhaust the reasonable needs of the Joint Venture for working capital and reserves as determined by the Management Co'nrnittee. No Profit distributions shall occur until such time as cumulative Profits exceed cumulative losses (measured from inception of this Agreement), all current liabilities are satisfied (including all Loan Capital has been repaid), and there is remaining cash on hand to
distribute.

(c) Distributions. From time to time, but no less than , Profits shall be distributed out of retained earnings of

(d) Capitol's Profit Recouoment. Notwithstanding anything to the contrary in this Agteement, Bustin's Share of Profits shall be paid to Capitol until Capitol has fully recouped its Profit Advances paid pursuant to Paragraph 8 hereof, it being agreed that Bustin' shall have no right to receive any Profit distribution prior to Capitol's recoupment of all its Loan Capital balances and Profit Advances.

Bank of America. Any withdrawals from any such account or accounts shall be made by check or other written instrument which shall be sigaed by the party or parties as are authorized pursuant to this Agreement and
Paragraph 10 hereof.

(e) Bank Account. All funds of the Joint Venture shall be deposited in an account or accounts in the name of the Joint Venture at

21
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RMF/2-5-9013

19. Earlv Termination Option. Without constituting an election of limiting any other rights or remedies of Capitol at law, in equity, or under this Agreement, which rights and remedies shall be cumulative, Capitol shall have the option, exercisable by notice to Bustin', to terminate this Agreement at any time if one or more of the following events occurs: (i) cumulative Joint Venture Losses (measured from inception of the Agreement) exceed one million dollars ($1,000,000), or (ii) The Joint Venture Working Capital Deficiency (as defined in Paragraph 17(c) above) exceeds two million dollars ($2,000,000), or (iii) Louis Burrell works less than full-time for Bustin' or in a job capacity less than his current job capacity for Bustin', or (iv) M.C. Ham.mer fails to perform his obligations hereunder, or (v) a petition or proceeding in bankruptcy is filed or instituted by or against Bustin' or for its reorganization or liquidation, or Bustin' becomes insolvent, or makes any assigrrment of its assets for the benefit of its creditors, or (vi) the Bustin' Parties fail or refuse to perform their duties under Paragraphs 13(a) through 136) hereoi or otherwise materially breach any provision of this Agreement, or (vii) Bustin' transfers or assigrrs, or attempts to transfer or assigrr any of its rights or duties hereunder without Capitol's consent, which consent may be withheld for any reason, or (viii) the present owners of the stock of Bustin' transfer or assigrr any part of their stock in Bustin' without Capitol's consent, which consent may be withheld for any reason. The unrecouped portion of Loan Capital shall be due and payable immediately upon the exercise of Capitol's early tennination option.
remedies or otherwise

20. Right of Susoension. If, for any reason, the Bustin' Parties or any one of them are in default under this Agreement at the time a payment is due hereunder from Capitol, without limiting any other rights or remedies of Capitol at law, in equity, or under this Agreement, which rights and remedies shall be cumulative, Capitol shall have the option, exercisable by notice to Bustin', to suspend all or any part of Capitol's obligations to make pa5rments to Bustin' and the Joint Venture under this Agreement until the Bustin'Parties have cured the default.
21. Windine Uo and Dissolution. Upon termination of the Agreement for any reason, the business of the Joint Venture shall be wound up and the assets and properties of the Joint Venture shall be Iiquidated and distributed as follows. Capitol no longer will fund the Joint Venture from and after such termination. The Joint Venture shall engage in no further business, other than that necessary to protect the assets of the Joint Venture, wind-up its business and distribute its assets as provided herein. Any expenses of winding up and liquidating assets of the Joint Venture (other than those expenses Capitol has agreed to advance pursuant to Paragraphs 12(a) through 12(g) hereof) shall be borne equally by Capitol and Bustin'. Any debts of the Joint Venture shall be paid as set forth in this Agreement.
Capitol have not both recovered their respective Loan Capital, then the
-22Plt5lO

(a) If Loan Capital not Recovered. In the event Bustin'

and

RMF2-5-90/3

following procedures for the liquidation of the Joint Venture assets, including Joint Venture Artist contracts, shall be followed:

1.

Bustin' and Capitol shall collectively determine which Joint Venture assets they desire to purchase ("Available
Assets").

2. The Joint Venture party purchasing a particular

Available Asset may fund. the purchase either by payrng cash to the Joint Venture or by reducing such party's Loan Capital balaace in the Joint Venture.

3. 4.

Bustin and Capitol, on an alternate basis, shall each set the purchase price to those Available Assets they elect to purchase.
The Joint Venture party who does not set the price of a

particular Available Asset shall have the first

opportunity to purchase same. If such party does not purchase such Available Asset, then the party setting the price must purchase the Available Asset at the set price.

5.

Those Joint Venture assets which neither party hereto has chosen to purchase shall be sold to outside third parties at the best price.

6. At the conclusion

of the liquidation procedure set forth in items 1 through 5 above, all monies in the Joint Venture will be distributed to Capitol and Bustin' in proportion to their respective Loan Capitol account balances at the start of the liquidation procedure until their Loan Capital accounts have been repaid. Thereafter, all monies shall be split in accordance with the Joint Venture Agreement.

recovered their respective Loan Capital, then the following procedures for the liquidation of the Joint Venture assets, including Joint Venture Artist contracts, shall be followed:

(b) If Loan Capital Recovered. If Capitol and Bustin' have both

1.

Venture and Bustin',

Capitol shall set a price for Bustin's share of the Joint

purchase Capitol's share of the Joint Venture at that price, or sell Bustin's share of the Joint Venture to Capitol for the same price.

at its

election, shall either

2. If
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neither Capitol nor Bustin' purchase the others interest, the Joint Venture will be liquidated under
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RMF/2-5-9orj

California Partnership law. However, Capitol and Bustin' shall frrst have the right to purchase the Joint Venture assets pursuant to the procedures set forth in
Paragraph 21(a) above.

contrary any, party is in breach of this Agreement at its termination, then the party suffering such breach or default shall be entitled to exercise all such party's rights arrd remedies, at law, in equity, or under this Agreement, to recover any damages, losses, cost, expenses and attorney's fees arising out of such breach or default. Such recovery shall take priority over and displace the procedure set forth in Paragraphs 21(a) and 21(b) above to the extent elected by the party suffering such breach, and in that event the procedure in Paragraph 21(a) and 21(b) shall apply only to the remainder of the Joint Venture Assets, if any.

(c) In the Event of Default. Notwithstanding anything to the in the foregoing procedure for winding up the Joint Venture, if

22. Securitv Agreement. Capitol shall have a first security interest in the Joint Venture assets to the extent of its Loan Capital and to secure the performance of the Bustin' Parties hereunder. Pursuant thereto, the Bustin' Parties and Capitol shall execute the Security Agreement and financing statements attached hereto as Exhibit 11 (the "security Agreement"). The happening of any event of default under the Security Agreement shall constitute a material breach of this Agreement.
the Joint Venture shall be entitled shall be allocated equally between Capitol and Bustin' in shares of fifby percent (50Vo) each. Except for Capitol's share of taxes incurred after the Effective Date arising out of the conduct of Joint Venture business, neither Capitol nor the Joint Venture is assuming, by virtue of this Agreement or otherwise, any liability or obligation, direct or indirect, absolute or contingent, of the Bustin' Parties for federal, state,

23. Tax Liabilities. Any and all tax credits or deductions to which

local or foreigrr taxes of any kind, and the Bustin' Parties shall hold harmless and indemnify Capitol and the Joint Venture from such taxes. Similarly, except for the Bustin' Parties' share of taxes incurred after the Effective Date arising out of the conduct of Joint Venture business, neither the Bustin' Parties nor the Joint Venture is assuming, by virtue of this Agreement or otherwise, any liability or obligation, direct or indirect, absolute or contingent, ofthe Capitol for federal, state, local or foreigrr taxes of any kin4, and the Capitol shall hold harrnless and indemnify Bustin'
Parties and the Joint Venture from such taxes.

43 24. Bustin' Parties' Representations and Warranties. The Bustin' 4 4 Parties jointly and severally represent, warrant and covenant to Capitol as 4 5 follows: 46 (a) Bustin' now is, and at all times during the term of this 47 Agreement it shall continue to be, a corporation duly organized, validly lq 49 existing and in good standing under the lawj of the State of
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into this Agreement; and otherwise

Certificate of Incorporation or By-Laws; and to the best of the Bustin' Parties knowledge the execution and delivery of this Agreement and

to carry out the transactions contemplated herein. The officer executing and delivering this Agreement on behalf of Bustin' is authorized to do so. The consummation of the transactions contemplated hereby will not violate any provisions of Bustin's

Bustin' has the right, power and authority to enter

performance hereunder do not require any approval or authorization by any government authority. When fully executed,. this Agreement will be a valid and binding obligation of Bustin' Parties, enforceable in accordance with its terms.

Incorporation, and all amendments thereto, as filed with the Secretary of State of a certificate of good standing of Bustin' from the secretary of the State of --, and true and accurate copies of Bustin's By-Laws as amended to date, will be delivered to Capitol concurrently with the execution of this Agreement.

(b) True and accurate copies of Bustin's Certificate

of

Paragraph 24(a) hereof, as certified by the Secretary or Assistant Secretary of Bustin', shall be delivered to Capitol concurrently with the execution of this Agreement, and such resolutions shall be in full force and effect. Neither the execution and delivery of this Agreement nor the performance of the duties and obligations contemplated hereby will constitute a breach, violation or a default of the Bustin' Parties, or any one of them, under any contract, license, or other agreement, arrangement or understanding.
cause the payment ofnot less than six thousand dollars ($6,000) per annum to M.C. Hammer and Louis Burrell out of the Profit Advances, as set forth in Paragraphs 6(c) and 7 hereof. In the event that California Civil Code $ 3423 is amended, with retroactive effect applicable to this Agreement in a manner that would require payment of a larger sum, Bustin' shall cause the pa5rment of such larger sum to M.C. Hammer and Louis Burrell out of the Profit Advances so that the terms of such statute or any amendment thereto shall be satisfied at all times during the term of this Agreement. If, for any reason, Bustin' fails to perform the provisions of this Paragraph, Capitol shall do so to the minimum extent necessary to maintain the rights of the Joint Venture to injunctive relief, and Bustin' immediately shall repay Capitol the cost

of Directors of Bustin' evidencing the authorization referred to in

(c)

True and accurate copies of resolutions adopted by the Board

(d) Bustin'shall

thereof.

(e) True and accurate copies of the Bustin' Artists Contracts (including all amendments and additions thereto) are attached hereto as Exhibits 1A through lE and each of said contracts will be in full force and effect as of the Effective Date. The Bustin' Parties have performed all obligations on their part to be performed under each of the Bustin' Artist Contracts. There is no default, by any party, in the performance of any of
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the obligations under said contracts. No advance, royalty, fee or other

Bustin'Artist, except as set forth in the Schedule of Commitments attached hereto as Exhibit 12 hereof. The Bustin'Artist Contracts are assignable to the Joint Venture and the Joint Venture will enjoy all the righls under those contracts. There presently are no duties, obligations, liabilities, claims, or disputes arising out of those contracts (except as expressly set forth in said contracts). Exhibit 13 attached hereto contains a complete and accurate listing of all master recordings of the Bustin' Artists in existence, or in the pro-ce-ss of being recorded, each of which are owned or controlled by Bustin' as of the date of this Agreement, and each of which has been duly
assigned to the Joint Venture.

money_is presently due and payable, or hereafber required to be paid to any

unemployment compensation, social security, sales, use, exiise, privilege and franchise returns and reports required by the laws of the United States or any state, territory or municipal or political subdivision thereof. All taxes, assessments, contributions, fees and other governmental charges or impositio_n-s upon the Bustin' Parties, or any one of them, or upon or measured by the properties or assets or income of the Bustin'Partiei, have been paid and none is past due. None of the Bustin' Parties has received any notice of o.*sessment or proposed assessment of any United States, state, municipal or other tax upon or measured by Bustin's income or the income of any one of the Bustin' Parties, and neither Bustin' nor the Bustin' Parties have any knowledge of any basis for any additional assessment of any such tax, nor have Bustin' or the Buitin' parties knowingly waived any law or regulation frxing, or consented to the extension of any period of time for the assessment bf any such tax or other governmental imposition or become committed so to do.

Bustin' Parties, or any one of them, have been duly and timely hled, including, without limiting the generality of the foregoing, all income,

(0 All tax returns

and reports required by law to be filed by the

_(g) There -presently is not outstanding against Bustin' or any Bustin'Party, and during the term of this Agreement there shall not be, any judgment, order, writ, injunction, garnishment, lien or decree of any court or of any federal, state, territorial, municipal or other commission, board or other adrninistrative or goverrrmental agency or authority. The Bustin' Parties are not aware of any violationi ol any federal, state, territorial, municipal or other statue, rule or regulation, applicable to them
or by which they may be bound.

4l (h) On the date hereof, and during the term of this Agreement, 42 43 Bustin'will not be subject to any claims, suits or threatened suiti, or have any material liabilities, whether accrued, absolute, contingent or otherwise !t 45 except (i) those obligations to be performed under thi Bustin' Artist 46 contracts assigned to the Joint venture; and (ii) those liabilities t7 ryecifigaly set forth in the Schedules attached hereto and fully disclosed to 4 8 Capitol. The Bustin' Parties presently are not, and during the term of this
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Agreement shall not be, infringing upon, any valid patents, trademarks, trade names or copyrights of others.

(i) During the term of this Agreement, the Bustin' Parties will not take any action or make any commitment in the name of Capitol or the Joint Venture beyond the authority granted herein; and they will not spend or authorize the expenditure of any monies of Capitol or the Joint Venture in violation of this Agreement; and they will not loan any funds or extend the credit of the Joint Venture to any person or entity; and they will not encumber or sell any property, assets or intangible rights of the Joint Venture.
promptly
proceeding against or affecting the Bustin' Parties or the Joint Venture.

0) During the term of this Agreement, the Bustin' Parties will advise Capitol, in writing, of any claim, litigation or

throughout the world of the professional name used by that Artist; and during the term of this Agreement, no other person w"ill have the right to use the name or to permit such name to be used in connection with records. Each such Joint Venture Artist has the authority to grant to the Joint Venture the right to use the name and neither Artist's use of the name nor the Joint Venture's use of the name in connection with the sale, advertisement and promotion of Artist's recordings will infringe upon the legal rights of any third parties.

(k) All Joint Venture Artists will be the sole and exclusive owner

0) All Joint Venture Artists signed during the term of this Agreement shall be free to enter into artist contracts with the Joint Venture; and, no such artist shall be a party to any contract which prevents such artist from fulfrlling any of the artist's obligations to t[e Joint Venture. Neither the execution and delivery ofan artist contract of the type specified herein, nor the performance thereof by the artist will constitute a violation or breach of, or a default under, any contract, license, commitment, indenture, lease or other agreement, arrangement or understanding, or any other restriction of any kind, to which the artist is a party or by which the artist is bound.
is sigrred to the Joint Venture.

(m) No Joint Venture Artist shall be under any disability, restriction or prohibition respecting musical works at the time such artist

shall cause the Joint Venture to receive, free and clear of any adverse claims, all mechanical licenses, copyrights, consents and other rights

(n) During the entire term of this Agreement,

the Bustin' Parties

requi,red to manufacture, distribute, advertise and promote, throughout the world, the sale of recordings of the Joint Venture Artists and all artwork delivered to Capitol or CRI in connection therewith.

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(o) The Joint Venture shall own all copyrights in the master I 2 recordings and Videos delivered to the Joint Venture, free and clear of any 3 adverse claims. 4 (p) Neither Bustin' nor the Bustin' Parties shall assign, 5 6 mortgage, hypothecate or encumber his or its interest in the Joint Venture. 7 (q) Bustin' shall obtain and maintain in effect all required union 8 9 recording licenses necessary for the Joint Venture to carry on its business, 10 including an AFM license. ll |2 25. Capitol's Representations and Warranties. Capitol represents, 13 warrants and covenants that: 14 (a) Capitol is a corporation duly organized, validly existing, and l5 16 in good standing under the laws of the State of California. I7 (b) Capitol has the power and authority, corporate or otherwise, 18 I 9 to execute and deliver this Agreement. The ofEcer executing and delivering 20 this Agreement on behalf of Capitol is authorized to do so. The 2 1 consummation of the transaction contemplated hereby will not violate any 22 provisions of Capitol's Certifrcate of Incorporation or By-Laws or any 23 applicable law or regulation, or any agleement to which Capitol is a party; 24 and the Board of Directors of Capitol has taken all action required by law, 25 its Certificate of Incorporation and By-Laws to authorize the execution and 2 6 delivery of this Agreement. 27 (c) To the best of Capitol's knowledge, there is no action, suit, 28 29 claim, charge, complaint, proceeding or investigation now pending or 3 0 threatened which would have a material adverse affect on the operation of 3I the Joint Venture.
32
3 3 3 3 3 3

4 purchase "keyman" life insurance, from a duly licensed and validly 5 existing insurance company, in the amount of _______ 6 insuring the lives of Kirk Burrell and Louis Burrell for the duration of this 7 Agreement, with Capitol as the named beneficiary of such insurance. 8 Such insurance shall be in effect from the Effective Date of this Agreement, 39 and a certifrcate of insurance duly verifying such insurance shall be 40 delivered to Capitol on or before the Effective Date. Kirk Burrell and Louis 4l Burrell shall submit, if required, to any physical examination required by 42 the insurance carrier and provide the personal data necessary to obtain 43 such policy. The cost of such insurance shall not constitute a Joint Venture 44 expense. 45 46 27. Assignment. Neither party hereto may sell, transfer, assign, 47 encumber, grant a security interest in (other than the security interest 4 q granted pursuant to Paragraph 22 hercof') or otherwise dispose of all or any 49 part of its interest in the Joint Venture, or any right or duty hereunder with
28
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26. Kev Man Insurance. At its own cost and expense, Bustin' shall

RMF/2_5-90/J

respect to the Joint Venture, to any person without the written consent of the otler party (which consent may be withheld for any reason) except Capitol may, without such consent, assign its interest in the Joint Ventuie, and any right or duty hereunder, to any parent, subsidiary, affiliated or successor company and to any one or more wholly-owned companies of Thorn-EMI plc; but no such assignment shall release Capitol from any of its duties, obligations or liabilities hereunder.

indemnifying party which are not expressly assumed by the Joint Venture or otherwise provided for pursuant to this Agreement, and (ii) any breach of any promise or warranty made by the indemnifying party contained in this Agreement, or any falsity of any representation made by the indemnifying party herein. The cost of furnishing such indemnifications shall be the sole responsibility of the indemnifying party and shall not be considered Joint Venture expenses.

28. General Indemnifications. Each party hereby agrees to indemnify, defend and hold each other party and the Joint Venture harmless from and against all demands, claims, actions or causes of action, assessments, losses, damages, liabilities, costs and expenses, including, without limitation, interest, penalties and attorneys' fees, arising out of or related to (i) claims against or liabilities of the

29. Settlement Costs and Liabilitv. Notwithstanding anything to the in this Agreement, any liability of the Joint Venture for damages to any third party, and the cost of settling any such claims, suits or threatened suits against the Joint Venture, shall be borne (i) if such liability or cost arise out of the breach of this Agreement or the falsity of any representation contained herein, one hundred per cent (LOOVo) by the party in breach or that made such misrepresentation, including all the defense costs and attorneys' fees, and such expenses shall not be tonsidered to be Joint Venture expenses (ii) otherwise such liability or cost of the Joint Ventule shall be payable fifty per cent (50Vo) by Capitol and fifty per cent (SOVo) by the Bustin' Parties, in which case they shall be considered Joint Venture expenses. In the latter case, paJrments for liability or settlement costs shall be added to the respective party's Loan Capital account, but only to the- extent they are considered Joint Venture expenses hereunder. Except as otherwise expressly provided in this Agreement, all other costi, e_xpenses, liability, damages and settlement payments arising out of any claim or-suit qgainst the the parties hereto, shall be borne by the party againt which the claim, suit or threatened suit is lodged.
contrary

30. Survival of Representations and Warranties. Each and every representation and warranty contained herein or made pursuant hereto shall be true and correct in all material respects when made and shall continue in full force and effect throughout the entire term of this Agreement and shall survive its termination.
31. Examination of Accounting Records.

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hereunder, examine the books and records of Capitol described below with respect to such objections. Bustin' shall not be entitled to withhold payment of any sums shown on Capitol's statements to be due to Capitol during the pendency of any such examination.

(a) Provided that Bustin' previously shall have notified Capitol in writing of its objections to such statement or accounting, specifuing with particularity each element of such statement or accounting to which objection is made, Bustin' may, at any mutually agteed upon time within six (6) months after any statement or accounting is rendered to Bustin'

Such examination shall be conducted at Bustin's sole cost and expense by an independent Certified Public Accountant designated by Bustin' who is not then engaged in an outstanding examination of Capitol's or CRI's books and records on behalf of a any person or entity other than Bustin' and who certifres: (i) He shall conduct such examination in accordance with the then current rules and regulations of the applicable society of Certifred public Accountants; (ii) such examination shall be conducted in accordance with GAAP; and (iii) the results of any such examination, including any written report resulting therefrom, and the contents thereof, shall not be disclosed to any Person (other than Capitol, Bustin' and Bustin's authorized agents, who themselves must agree to confrdentiality as a condition precedent to their receipt of confrdential material) without Capitol's prior written consent. As a condition precedent to any such inspection, Capitol may require any such Certified Public Accountant to execute a Letter of Engagement pledging his compliance with the terms of this Paragraph.

(b)

Such examination shall be made during Capitol's usual business hours at the place where Capitol maintains the books and records described below, and Bustin's examination shall be limited to the same. Bustin's sole right to inspect Capitol's books and records shall be as set forth in this Paragraph 31, and Capitol shall have no obligation to produce such books and records more than once with respect to each statement rendered to Bustin'nor more than once in any calendar year.

(c)

generated in the ordinary course of Capitol's business by Capitol's computer system, and that said computergenerated compilations shall constitute the sole source documents in, and be dispositive of, any dispute between the parties as to the accuracy or

(d) Without limiting the generality of the foregoing, Bustin' acknowledges that Capitol's statements of account and inventory
slT-aries are based upon compilations

completeness of statements and inventories furnished by Capitol hereunder. Capitol shall have no obligation to furnish Bustin' with any additional books or records.
accordance with the first sentence of Paragraph 31(a), each statement rendered to Bustin' shall be final, conclusive and binding on Bustin' and

(e) Except with respect to

objections made

by Bustin' in

shall constitute an account stated. Bustin' shall be foreclosed from

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maintainin_g any action, claim or proceeding against Capitol in any forum or,tribunal with respect to any statement or accounting due heieunder unless: (i) s-uch action, claim or proceeding is commenced against Capitol in- a courtof competent jurisdiction within Two (2) years afterlhe date upon which such statement or accounting is rendered, and (ii) Bustin' previously shall have submittd to Capitol for inspection and review a copy of a written r_eport resllting from any such examination at least Six (6) months prior to the institution of any such action, claim or proceeding

32. Nq Third Party Benefrts. This Agreement will be binding upon, inure to the benefrt of and be enforceable by the parties hereto and their respective successors and permitted assigns. This Agreement is not intended, and shall not be deemed or construed, to confer any rights, power-s or privileges on any person, firm, corporation or other entity not a party hereto, or to create any third party beneficiary liability. 33. Countero.arts. This Agreement may be executed in any nunber - counterparts, of each of which shall be deemed an original but ali of which together shall constitute one and the same instrument; and in making proof hereof it shall not be necessary to produce or account for more than one such counterpart.
3a. Aftornevg-Eces, If either party hereto commences a legal action or proceeding agains,t the other to enforce rights or obligations arising out of this A-gr-eement, the prevailing party in such action oi proceeding ihall be awarded its reasonable attorneys' fees in addition to alI other cos-ts and expenses of the legal action.

35. Notices. All notices, claims, requests, demands and other communications hereunder or in connection with transactions contemplated hereby ("Notices") will be in writing and will be deemed to have_been duly given if delivered in person or mailed (by registered or
certified mail, postage prepaid, return ieceipt requested) as-follows:

(a)

If to the Bustin'Parties:
Bustin' Productions, Inc.

with a courtesy copy ofnotices to: Manatt, Phelps, Rothenberg & Phillips
11355 West Olympic Blvd. Los Angeles, CA 90064

(b)

If to Capitol:
Capitol BJV, Inc. C/O Capitol Records, Inc.
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I 2 3 4 5 6 'l 8 9 10 1I 12 13 l4 I5 l6 l7 I8 19 20 2l 22 23 24 25 26 27 ZB 29 30 3l 32 33 34 35 36 37 38 39 40 4t 42 43 44 45 46 47 48 49

1750 North Vine Street Hollywood, CA 90028 Attention: Secretary

w'ith a courtesy copy of notices to:

Capitol BJV, Inc. C/O Capitol Records, Inc. 7750 North Vine Street Hollywood, CA 90028 Attention: Legal Department
or to such other address as the person to whom the Notice is to be given may have furnished to the others in writing in accordance herewith. All Notices will be deemed received on the date of delivery or, if mailed, on the date appearing on the return receipt therefor.

36. Severabilit]'. If any part of this Agreement is determined to be void, invalid, inoperative or unenforceable by a court of competent jurisdiction or by any other legally constituted body having jurisdiction to make such determination, such decision shall not effect any other provisions hereof, and the rernainder ofthis Agreement shall be effective as though such void, invalid, inoperative or unenforceable provision had not
been contained herein.

37. Force Maj eure. If at any time during the term of this Agreement, by reason of any act of God, fire, earthquake, flood, explosion, strike, labor disturbance, civil commotion, act of Government, its agencies or offrcers, any order, regulation, ruling or action of any labor union affecting Capitol or CRI, or any shortage of or failure or delays in the delivery of materials, supplies, labor or equipment, or any other cause or causes beyond Capitol's control, the performance of any of Capitol's or CRI's obligations hereunder is delayed, intermpted or prevented, then the performance of such obligation shall be excused to the extent so delayed, interrupted or prevented. If any such period of suspension exceeds six (6) months, Bustin' may terminate this Agreement upon giving an additional thirty (30) days notice to Capitol, unless the conditions precipitating the event of force majeure are prevalent generally throughout the U.S. record industry, in which case this Agreement shall remain in full force and effect, subject only to such period of suspension.
38. Waiver. The waiver by Capitol of any term or condition of this Agreement, or any part hereof, shall not be deemed a waiver of any other term or condition of this Agreement, or of any later breach of this Agreement, or of any part thereof.

39. Entire Agreement. This Agreement, including the exhibits, schedules and other writings referred to herein or delivered pursuant hereto, which form a part hereof, contains the entire understanding of the
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parties with respect to its subject matter. There are no restrictions, agreements, promises, warranties, covenants or undertakings other than those expressly set forth herein or therein. This Agreement supersedes all prior agreements and understandings between the parties with respect to its subject matter. This Agreement may be amended only by a written instrument signed by all the parties.

40. Governing Law. This Agreement shall become binding only when executed by an authorized sigrrer for.Bustin', and by Louis Burrell and Kirk Burrell, pka M.C. Harnrner, and by an authorized signer on behalf of Capitol. It shall be deemed to have been made in the State of California and its validity, construction, breach, performance and operation shall be governed by the law ofthe State of California applicable to contracts made and to be performed in the State of California.
IN WITNESS HEREOF, the parties have executed this Agteement as ofthe date and year first written above.
CAPITOL BJV, INC.
BUSTIN' PRODUCTIONS, INC.

By: An authorized sigrrer

By:------Title:

An authorized si.gler

Title:

Louis Burrell

Kirk Burrell, pka M.C. Hammer

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:ndex of Defined Terrns

Administrat e

Agreement l Annual Net Saies 18

Fee 18

Roster 4

second Video 16 Secunty Agreement 24

Artist Contract Form 1 5 Artwork Fund 13 Ava able Assets 23 Basic Co op Advertising Fund l o Bustin'l

the Bustin'Parties l Unauthorlzed Expenses 1 9 Variable Costs 1 3 VideO Fund 13 working capita1 20

Busln'Artist Contracts l
Buslnt Artists l

working Capital Dcficicncy 20

Bustln'Royaky 19
Bustin's Share 21 BusJt Records l Caplo1 1 Capitors share 21

CR!1
Dist

bulon Agreement 6

Dropped Artist 4 Effedive Date 2

Excess Expenses 19
Executive Producer 4
First Video 1 6

Foreign License Agreement 7

GAAP 9

Fu

Pnced un1 4

1ntial Term 2 oint Venture l oint Venture Artist 2

M.C.Hammerl

Key Man 4 Loan Capita!11 Losses 21 LP 4

Management Committee 7 Manufactunng Agreement 6

Marketing Fund 1 2 Net Receipts 20 Notices 31 0ption Period 3

0verhead Allowances 12
Pre existing

obligations 3

Principals l

Profit Advances 6 P lts 21 Recording Funds 12

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