TOKEN PURCHASE AGREEMENT
ASSIGNMENT OF SOUND RECORDING ROYALTIES
This Token Purchase Agreement/Assignment of Sound Recording Royalties (“Agreement”) is the agreement by and between Five Stone Entertainment, Inc f/s/o Eric Paslay (“Artist”) and each purchaser of a Token (as defined below) via the primary or secondary markets (“Purchaser”).
- Artist is the owner of 100% of the copyright in and to the Sound Recordings embodied on the album entitled “Even If It Breaks Your Barefoot Friday Night” (collectively, “Recording”);
- Artist has minted a non-fungible token to give purchasers unique and identifiable ownership and access as recorded on a blockchain (“Token”) linked to a percentage of streaming revenue payable to Artist by its distributor (“Distributor”) after the Start Date (as defined below) for five (5) consecutive years following the Start Date exclusively from the on-demand streaming of the Recording on digital service providers (“DSPs” (as such term is commonly used in the music industry) subject to any fees charged by Distributor, and any costs charged or incurred for the transaction (“Streaming Royalties”);
- Artist has designated Solo Music, Inc. (“Solo”) as Artist’s agent to collect of a portion of Artist’s Streaming Royalties from distributors of the Recording and to administer and facilitate the distribution of such royalty payments to Purchaser(s) of the Token (the “Solo Agreement”);
- Purchaser has purchased a Token at the purchase price set forth on the Solo website giving Purchaser certain royalty income participation rights with respect to the Recording on the terms and conditions stated in this Agreement; and
- Each Purchaser may, subject to the obligations herein, transfer or assign such Purchaser’s Token to a third party; thus the term “Purchaser,” as used in this Agreement, includes each and every purchaser of the Token in any Secondary Sale (as defined below).
NOW, THEREFORE, in exchange for the mutual agreements made hereunder, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Artist and Purchaser hereby agree as follows:
- Assigned Share:
- The assignment of Streaming Royalties will not be effective unless and until the later of (i) Purchaser provides to Solo the blockchain address of Purchaser’s cryptocurrency wallet compatible with the Token and in compliance with Solo’s standard terms and conditions, and if so requested by Solo, Purchaser’s completion of any due diligence information and processes, including without limitation, any Know Your Customer (i.e., compliance and client onboarding process), and (ii) the date Purchaser receives the Token in the Purchaser’s cryptocurrency wallet (as recorded on the blockchain) (“Start Date”). If Purchaser fails to meet any of the applicable conditions above, Artist or Solo may suspend the delivery of the Token and may terminate this Agreement and any Assigned Share to such Purchaser.
- Each Token may include, or entitle its current owner to, benefits other than receipt of the Assigned Share, such as off-chain packages or “air-drop” benefits, as determined from time to time by Artist and/or Solo, in their sole and absolute discretion.
- Distribution of Assigned Share:
- Artist has authorized Solo to distribute or make available the Assigned Share from time to time to the then current Purchaser, as determined by the recorded ownership of the Token. The Assigned Share will be paid or claimable in the form of ETH, the native token of the Ethereum blockchain or such other cryptocurrency as determined by Solo in its absolute discretion. If Solo determines to pay the Assigned Share in ETH, the quantity shall be determined by multiplying (i) the amount of U.S. Dollars due to such Purchaser’s Assigned Share by (ii) the conversion rate of USD to ETH, at the time such distribution is first paid to or is claimable by Purchaser. Artist’s and Solo’s obligations with respect to the Assigned Share will be deemed to be satisfied if a transfer of the Streaming Royalties has been initiated by Solo (or Artist, if applicable) to the Purchaser’s wallet or such funds have otherwise been made available to claim. Purchaser hereby waives any audit rights against Artist or Solo with respect to the accounting of the Streaming Royalties and/or Streaming Royalty Shares.
- The timing and frequency of distribution of the Assigned Share is subject to Solo’s receipt of Streaming Revenues from the Distributor.
- Solo may deduct from payments to Purchaser “gas” fees, taxes, network fees, or other related costs and expenses incurred by Solo or charged to the transaction, including any accounting or distribution fees incurred by Artist in the event Solo ceases to be the administrative service provider regarding the Assigned Share. Each Purchaser is solely responsible for calculating and paying or collecting all taxes associated with Purchaser’s Assigned Share.
- For the avoidance of doubt, any of the Streaming Royalties payable to Purchaser shall not accrue and/or account to Purchaser until after such purchase and transfer of ownership (as recorded on the relevant blockchain) has taken place. Purchaser will retain such rights to the Assigned Share only for so long as (i) the Token remains in the Purchaser’s cryptocurrency wallet; and (ii) Purchaser have otherwise complied with this Agreement. The rights in the prior sentence are non-transferrable, except that it will automatically transfer in connection with the transfer of the Token.
- Secondary Sale:
- Each Purchaser may freely transfer or assign its Token to a third party purchaser on the secondary market (a “Secondary Sale”) by way of an on-chain transfer, with all consideration for the Token payable on-chain through the cryptocurrency wallet used to acquire the Token, provided that such third party expressly accepts the terms of this Agreement and any applicable terms and conditions that may be applied by Artist or Solo and made available to any Purchaser. Upon any Secondary Sale, the seller of such Token shall cease to have any rights with respect to the Streaming Royalties, Assigned Share or any other benefits or assets incorporated into or associated with the Token, and the new Purchaser shall thereafter be entitled to receive the Assigned Share, subject to all of the terms and conditions of this Agreement. Purchaser acknowledges and agrees that all subsequent transactions of the Token will be affected on the blockchain network governing the Token, and Purchaser will be required to make or receive payments exclusively through its cryptocurrency wallet.
- Each Secondary Sale of a Token by a Purchaser is subject to a fee of seven and one-half percent (7.5%) of the gross revenue from such Secondary Sale to Artist and a fee of two and one-half percent (2.5%) of the gross revenue of such Secondary Sale to Solo (the “Secondary Market Fee”) to be paid directly to Solo via the NFT smart contract. Without limitation of any other termination rights, Artist or Solo may suspend or terminate Purchaser’s right to the Assigned Share if it has a reasonable basis for believing that Purchaser has engaged in an off-chain sale of the Token, or otherwise engaged in any off-chain transactions for the purchase or sale of the Token without paying the applicable Secondary Market Fee. Purchaser, and all subsequent purchasers, shall be responsible for paying the Secondary Market Fee, regardless of whether such purchase price is fulfilled on-chain, off-chain, or in a combination of the foregoing.
The following percentages of gross revenue from the Secondary Sale shall be encoded in the NFT smart contract:
NFT Owner 90%
- Warranties and Representations/Acknowledgements/Indemnification:
- Each Purchaser acknowledges and agrees that (i) this Agreement does not convey any interest in the underlying musical composition embodied in the Recording, or any other rights, interests, revenues or royalties in the Recording other than the Assigned Share of the Streaming Royalties, (ii) this Agreement consists of assignment of a revenue stream only and does not convey any ownership interest, copyright, or other rights in or to the Recording or underlying musical composition, which is fully reserved and retained by Artist, and (iii) this Agreement does not convey to any Purchaser any right to use the name, image or likeness of the Artist; provided that Purchaser may use Artist’s name as necessary to accurately describe the Token in the case of any potential Secondary Sale.
- Each Purchaser warrants and represents that neither Artist nor Solo (i) has made any promise or representation relating to the subject matter of this Agreement other than as expressly stated in this Agreement including, by way of example only, any promises or representations about the potential commercial success of the Recording or the amount of Streaming Royalties, (ii) guarantees that any particular amount of Streaming Revenues will be distributed via the Assigned Share, (iii) guarantees that Streaming Revenues will be distributed or made available via the Assigned Share with any particular frequency; or (iv) guarantees that a market does or will exist for any Secondary Sales. Each Purchaser expressly acknowledges that the Assigned Share may consist of little or no Streaming Royalties, that there may not be a market for any Secondary Sale, and to the extent there is a market for any Secondary Sale, the Token may or may not have any material value on that market.
- Each Purchaser represents and warrants that Purchaser (i) is the age of majority in Purchaser’s place of residence (which is typically 18 years of age in most U.S. states) and has the legal capacity to enter into this Agreement, (ii) that Purchaser will use and interact with the Token and Streaming Royalties only for lawful purposes and in accordance with this Agreement, and (iii) that Purchaser will not use the Token or Streaming Royalties to violate any law, regulation or ordinance or any right of Artist, its licensors or any third party, including without limitation, any right of privacy, publicity, copyright, trademark, or patent.
- Purchaser further acknowledges that:
- This Agreement does not constitute a prospectus or offering, is not an offer to sell, and is not a transaction to raise funds: Specifically, a sale of the Token is not intended to be an offering or sale of securities, swaps on either securities or commodities or a financial instrument of any kind as may be determined by any law, rule, or regulation. Neither Artist nor Solo makes any warranty or representation regarding the application of securities laws and the regulation of sales of Tokens by the SEC or the application of any tax laws by the Internal Revenue Service or the U.S. Treasury Department. Purchases and sales of Tokens may not be subject to the protections of any laws governing those types of financial instruments, and except as may be prohibited by any Federal law, Purchaser waives any disclosure requirements as may be required concerning the sale of securities.
- Neither Artist nor Solo is giving Purchaser any advice or recommendation regarding investment strategies for purchasing Tokens for financial investment purposes. Purchaser is solely responsible for determining the nature, potential value, suitability, and appropriateness with respect to the purchase of Tokens. With respect the purchase of Tokens, Purchaser acknowledges and agrees that it is not expecting to profit from the Tokens based on any efforts by Artist or Solo or its affiliates.
- The price and liquidity of blockchain assets, including Tokens, are extremely volatile and may be subject to large fluctuations; fluctuations in the price of other digital assets could materially and adversely affect Tokens, which may also be subject to significant price volatility; legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of Tokens; Tokens are not legal tender and are not backed by the government; transactions in Tokens may be irreversible, and, accordingly, losses due to fraudulent or accidental transactions may not be recoverable; some transactions in Tokens shall be deemed to be made when recorded on a public ledger, which is not necessarily the date or time of the transaction; the value of Tokens may be derived from the continued willingness of market participants to exchange fiat currency or digital assets for Tokens, which may result in the potential for permanent and total loss of value of a particular Token should the market for that Token disappear; and the nature of Tokens may lead to an increased risk of fraud or cyber-attack, and may mean that technological difficulties experienced by Artist or Solo may prevent the access to or use of the Tokens.
- Purchaser is solely responsible for determining the nature, potential value, suitability, and appropriateness of risks hereunder; Purchaser acknowledges that this Agreement does not disclose all of the risks associated with Tokens and other digital assets. Neither Artist nor Solo will be responsible for any communication failures, disruptions, errors, distortions or delays Purchaser may experience when using Tokens, however caused.
- The purchase of a Token is a non-reversible and non-refundable event. Neither Artist nor Solo shall have any obligation or liability for the secure custody or use of the Token and any losses arising from such custody or use.
- Purchaser hereby expressly waives and releases any and all claims, now known or hereafter known or arising, against Artist and Solo, its affiliates and their officers, directors, manager(s), employees, agents, shareholders/members (collectively, “Releasees”), related to the Tokens. Purchaser covenants not to make or bring any such claim against Artist or Solo or any other Releasees, and forever releases and discharges Artist and Solo and all other Releasees from liability under such claims.
- Purchaser shall indemnify and hold Artist and Solo harmless from and against any and all claims, damages, losses, costs, investigations, liabilities, judgments, fines, penalties, settlements, interest, and expenses (including reasonable attorneys’ fees) that directly or indirectly arise from or are related to any claim, suit, action, demand, or proceeding made or brought by a third party against Artist or Solo arising out of or in connection with Purchaser’s breach of this Agreement. Each Purchaser shall further protect, defend and indemnify and hold Artist and Solo harmless from and against any and all losses imposed upon or incurred by them as a result of any claim by the Purchaser in any Secondary Sale to the extent such claim is based on anything other than the express terms of this Agreement.
- THE TOKEN AND ASSIGNED SHARE ARE PROVIDED “AS IS,” WITHOUT WARRANTY OF ANY KIND. WITHOUT LIMITING THE FOREGOING, ARTIST EXPLICITLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUIET ENJOYMENT AND NONINFRINGEMENT, AND ANY WARRANTIES ARISING OUT OF COURSE OF DEALING OR USAGE OF TRADE. ARTIST MAKES NO WARRANTY THAT THE TOKEN AND ASSIGNED SHARE WILL MEET ASSIGNEE’S REQUIREMENTS OR BE AVAILABLE ON AN UNINTERRUPTED, SECURE, OR ERROR FREE BASIS. ARTIST MAKES NO WARRANTY REGARDING THE QUALITY, ACCURACY, TIMELINESS, TRUTHFULNESS, COMPLETENESS OR RELIABILITY OF ANY INFORMATION OR CONTENT RELATED TO THE TOKEN AND ASSIGNED SHARES.
- NEITHER ARTIST NOR SOLO WILL BE RESPONSIBLE OR LIABLE TO PURCHASER FOR ANY LOSS AND TAKES NO RESPONSIBILITY FOR, AND WILL NOT BE LIABLE TO PURCHASER FOR, ANY USE OF A TOKEN, INCLUDING BUT NOT LIMITED TO ANY LOSSES, DAMAGES OR CLAIMS ARISING FROM: (i) USER ERROR SUCH AS FORGOTTEN PASSWORDS, INCORRECTLY CONSTRUCTED TRANSACTIONS, OR MISTYPED WALLET ADDRESSES; (ii) SERVER FAILURE OR DATA LOSS; (iii) CORRUPTED CRYPTOCURRENCY WALLET FILES; (iv) UNAUTHORIZED ACCESS TO TOKEN; OR (v) ANY UNAUTHORIZED THIRD PARTY ACTIVITIES, INCLUDING WITHOUT LIMITATION THE USE OF VIRUSES, PHISHING, BRUTE-FORCING OR OTHER MEANS OF ATTACK AGAINST BLOCKCHAIN NETWORK UNDERLYING THE TOKEN AND ASSIGNED SHARE.
- A TOKEN IS AN INTANGIBLE DIGITAL ASSET THAT EXISTS ONLY BY VIRTUE OF THE OWNERSHIP RECORD MAINTAINED IN THE APPLICABLE BLOCKCHAIN NETWORK AND LEDGER. ANY TRANSFER OF TITLE THAT MIGHT OCCUR IN ANY UNIQUE DIGITAL ASSET OCCURS ON THE DECENTRALIZED LEDGER WITHIN SUCH BLOCKCHAIN NETWORK, WHICH NEITHER ARTIST NOR SOLO CONTROL. NEITHER ARTIST NOR SOLO GUARANTEE THAT THEY CAN AFFECT THE TRANSFER OF TITLE OR RIGHT IN ANY TOKEN. PURCHASER BEARS FULL RESPONSIBILITY FOR VERIFYING THE IDENTITY, LEGITIMACY, AND AUTHENTICITY OF ASSETS. NOTWITHSTANDING INDICATORS AND MESSAGES THAT SUGGEST VERIFICATION, NEITHER ARTIST NOR SOLO MAKE ANY CLAIMS ABOUT THE IDENTITY, LEGITIMACY, OR AUTHENTICITY OF ASSETS OR ANY PURPORTED SUBSEQUENT TRANSACTIONS.
- EACH PURCHASER ASSUMES ALL RISKS THAT LAWS, REGULATIONS, ENFORCEMENT PRACTICES, AND CHANGES THERETO WILL HAVE ON THE VALUE OF THE TOKEN AND ASSIGNED SHARE.
- NEITHER ARTIST NOR SOLO ARE RESPONSIBLE FOR ANY KIND OF FAILURE OR BEHAVIOR OF SOFTWARE (E.G., WALLET, SMART CONTRACT), BLOCKCHAINS OR ANY OTHER TECHNOLOGY IMPACTING A TOKEN OR ASSIGNED SHARE. NEITHER ARTIST NOR SOLO ARE RESPONSIBLE FOR CASUALTIES DUE TO LATE REPORT BY PAYORS OR REPRESENTATIVES (OR NO REPORT AT ALL), OR OF ANY ISSUES WITH THE BLOCKCHAIN SUPPORTING THE TOKEN INCLUDING FORKS, TECHNICAL NODE ISSUES OR ANY OTHER ISSUES CREATING LOSSES AS A RESULT.
- TO THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER ARTIST NOR ITS SERVICE PROVIDERS (INCLUDING SOLO) INVOLVED IN CREATING, PRODUCING, OR DELIVERING A TOKEN WILL BE LIABLE FOR ANY INCIDENTAL, SPECIAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOST PROFITS, LOST REVENUES, LOST SAVINGS, LOST BUSINESS OPPORTUNITY, LOSS OF DATA OR GOODWILL, SERVICE INTERRUPTION, COMPUTER DAMAGE OR SYSTEM FAILURE OR THE COST OF SUBSTITUTES OF ANY KIND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR FROM THE USE OF OR INABILITY TO USE OR INTERACT WITH TOKENS, WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY OR ANY OTHER LEGAL THEORY, AND WHETHER OR NOT ARTIST OR ITS SERVICE PROVIDERS HAVE BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGE, EVEN IF A LIMITED REMEDY SET FORTH HEREIN IS FOUND TO HAVE FAILED OF ITS ESSENTIAL PURPOSE.
- THE EXCLUSIONS AND LIMITATIONS OF DAMAGES SET FORTH ABOVE ARE FUNDAMENTAL ELEMENTS OF THE BASIS OF THE BARGAIN BETWEEN ARTIST AND EACH PURCHASER.
- Future situations or changing circumstances that are outside Artist’s control may result in (i) one or more provisions of this Agreement becoming impossible for Artist or Solo to perform or (ii) one or more unintended and undesirable outcomes for Purchaser under the terms of this Agreement, and in such an event Artist may update this Agreement in its sole discretion, provided, however, that such update must be intended primarily for the benefit of Purchaser and also be reasonably likely to benefit Purchaser. In the event of any such update by Artist, Artist will notify Purchaser by posting the amendment or updated Agreement in place of this Agreement by notice to Purchaser. Purchaser’s continued possession or utilization of Token after the posting of such updated Agreement constitutes an acceptance and agreement to such update. If Purchaser does not agree to bound by such changes, Purchaser may transfer their Token.
- This Agreement is entered into and shall be construed in accordance with the laws of, the State of Delaware, without regard to principles of conflicts of law. The parties agree that any and all disputes, claims or controversies arising out of or relating to this Agreement shall be submitted to JAMS, or its successor, for mediation, and if the matter is not resolved through mediation, then it shall be submitted to JAMS, or its successor, for final and binding arbitration. Any dispute, controversy or claim arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this Agreement to arbitrate, will be referred to and finally determined by arbitration in accordance with the JAMS Smart Contract Rules. The seat of the arbitration will be New York County, New York. Judgment upon the award rendered by the Arbitrator(s) may be entered by any court having jurisdiction thereof.
- No failure by Artist or Solo shall constitute a breach of this Agreement unless the Purchaser provides written notice to Solo (or Artist, as applicable) specifying in reasonable detail the facts and circumstances allegedly constituting a breach of this Agreement and Artist, fails to cure, or cause Solo to cure, the alleged breach within thirty (30) days of receipt of such notice.
- If any provision of this Agreement is invalid or unenforceable under any statute or rule of law, the provision is to that extent to be deemed omitted, and the remaining provisions shall not be affected in any way.
- Each Purchaser shall send any notice to Artist and Solo to the email addresses set forth below:
Artist and/or Solo shall post any notice to a Purchaser to the URL address specified in the metadata of the Token’s smart contract.
- This Agreement may be executed by electronic means, including by email, on-screen acceptance of this Agreement, purchase of a Token in a Secondary Sale, and acknowledgement of receipt of a Token or smart contract interaction with the Token. In all events, each Purchaser’s provision of the blockchain address and/or the identity verification information of such Purchaser shall constitute such Purchaser’s acceptance and execution of this Agreement. This Agreement is binding upon and inures to the benefit of the successors, assigns, heirs, executors, and legal representatives of the parties.
By purchasing a Token, Purchaser acknowledges Purchaser has carefully read and agrees to the terms of this Agreement.
Token Contract Address: