Summary of Terms

AUSTIN MUSIC FOUNDATION, INC.

SUMMARY OF TERMS FOR 2005-2006 AUSTIN MUSIC INCUBATOR PROGRAM

This is a summary, for informational purposes only, of the principal terms of the 2005-2006 Austin Music Incubator ("Incubator") program offered by the Austin Music Foundation, Inc. (the "Foundation").  This summary of terms is not intended to be a binding agreement between the Foundation and any applicant.

GENERAL TERMS OF THE APPLICATION PROCESS

Applicant Requirements: 
 
Permanent residence in Austin or within 50 miles of Austin;
Previous production of a demo or full-length recording;
Not currently under contract with a nationally-recognized record label  or publisher;
Must have sufficient original new material to complete a full-length recording;
Must have the ability to contribute a $500 Incubator participation fee IF selected as an awardee;
Must already own or have arrangements to acquire instruments, equipment and rehearsal space;
Must be a member of the Foundation;
Must not be currently involved in any litigation, investigation or proceeding, nor have any reasonable basis to believe such litigation, investigation or proceeding is likely;
Must be available for performances on March 5, 2005 and March 18, 2005, as well as an interview on February 24th, 2005 and be available and able to travel during the program period within the United Stated for conferences, festivals, showcases and other performances as determined in the reasonable discretion of the Foundation; and
Must not be a family member of Foundation employees, executive staff, Board of Directors members or Advisory Board members.

Application Locations;

Submission: Online applications are strongly preferred and are available at: www.austinmusicfoundation.org.

Hard copy applications are available by request or at area locations.  Submission of hard copy applications and application materials can be made to Austin Music Foundation - Incubator, P.O. Box 4309, Austin, Texas 78765.
Application Fee: $30 non-refundable application fee, payable to Austin Music Foundation. Application fee is discounted to $20 if paper application is postmarked by January 5, 2005 or if application is completed online, INCLUDING THE SUBMISSION OF AN ELECTRONIC PRESS KIT instead of a paper press kit.

Application Components:

FOR ONLINE APPLICANTS: (STRONGLY PREFERRED)

Applicants must submit online a completed application form including essays. You must also mail in a single envelope, to Austin Music Foundation - Incubator, P.O. Box 4309, Austin, TX 78765, ALL of the following:

Two copies of a press kit (no longer than three pages in length and suitable for reproduction);
A photo;
A $30 Application Fee, payable to the Austin Music Foundation by check or money order;
Two copies of original recorded music on CD, with two tracks designated for consideration.  If no tracks are designated, only the first two tracks of the recording will be considered.

IMPORTANT NOTE: If you choose to submit an electronic press kit in lieu of a paper press kit, the Application Fee is discounted to $20, and you DO NOT need to include a paper press kit and photo in your envelope. If you also submit your music by uploading mp3's into our system and pay online via PayPal, you will not need to send us anything in the mail.

FOR PAPER APPLICANTS:

Applicants must submit by mail a completed application form, including typed essays, and then mail in a single envelope, to Austin Music Foundation - Incubator, P.O. Box 4309, Austin, TX 78765, ALL of the following:

A completed Application Form, including 3 typed essays;
A complete and signed copy of the Application Official Rules, Terms and Conditions;
Two copies of a press kit (no longer than three pages in length and suitable for reproduction);
A photo;
A $30 Application Fee, payable to the Austin Music Foundation, payable by check or money order. Application Fee is discounted to $20 for paper applications that are postmarked no later than January 5, 2005;
Two copies of original recorded music on CD or tape, with two tracks designated for consideration.  If no tracks are designated, only the first two tracks of the recording will be considered.

Interview; Performance: Finalists will be required to be available for a 30-minute interview on February 24, 2005 and a separate 30-minute performance to the Advisory Board.  Additionally, applicant must be available on March 5, 2005 and March 18, 2005 for showcase performances.

Application Due Date: All applications and any attachments or component parts thereof must be postmarked, emailed or posted online by 11:59 p.m. C.S.T on January 13, 2005.

GENERAL TERMS OF THE INCUBATOR PROGRAM

Term:  April 15, 2005 until October 15, 2006.

Recording: For each Incubator participant ("Artist,") the Foundation will facilitate the recording of a master recording of the Artist's work (the "Recording").  Such facilitation may include, but does not guarantee, the use of a recording studio, the use of equipment connected with the Recording, manufacturing of 1,000 CDs, printing or labeling expenses, and all corresponding costs or expenses, as budgeted by the Artist and approved by the Foundation, not to exceed an aggregate amount of $15,000.     

Mentoring: Artists will receive informal mentoring from the Foundation's Advisory Board and staff members, and will meet at least monthly with Foundation staff members regarding Artist milestones and deliverables.

Ownership/Use Rights: Artists shall maintain sole ownership of the Recording and all related recording and publishing rights and copyrights.  The administration of the Recording will be joint as between the Foundation and the Artist until the financial participation of the Foundation, as discussed below, ceases.  However, Artists must sign a participation agreement granting the Foundation a license to use the Recording for promotional, archival, compilation, educational and other purposes related to the mission of the Foundation.  In addition, the Artist shall grant to the Foundation the nonexclusive right to use his or her name, voice, likeness and/or biographical data for promotional, archival, compilation, educational and other purposes related to the mission of the Foundation, without additional compensation.

Financial Participation: As a condition to participation, Artists must pay a collective $500 participation fee, payable within 30 days of entry into the Incubator program.
The Foundation shall participate in revenues of the Artist derived from exploitations of the Recording to recover Incubator program costs and to share in any upside potential with the Artist, not to exceed an aggregate amount of $30,000.  This financial participation shall apply to: (i) the proceeds of unit sales of the Recording at a rate of 5.0% of the revenues received by Artist from each unit sale; (ii) music publishing revenues related to any musical composition embodied in the Recording (if written or co-written by Artist or member of Artist), at a flat rate of 5.0%; and (iii) any other revenues derived from exploitations of the Recording, including advance monies, at a flat rate of 5.0%. 
The Foundation's financial participation shall be in effect until the earliest to occur of: (i) reaching the $30,000 aggregate participation limit; or (ii) three (3) years from October 15th, 2006.  Writers and publishers of the compositions comprising the Recording shall be entitled to receive the then-current full minimum statutory mechanical royalty rate on any sales of compilation recordings or other commercial sales incorporating the Recording under the Foundation's control.

Performances: Each Artist shall agree to provide five (5) live concert performances for the Foundation's benefit, at the Foundation's reasonable direction.  The Artist will be entitled to select a local non-profit organization to benefit from one such performance.  

OTHER MATTERS

Expenses; Accounting: At the beginning of the 2005-2006 Incubator term, the Foundation and the Artist shall agree upon a budget covering the Recording and any other expenses related to the Artist's participation in the 2005-2006 Incubator (the "Budget").  Funds covering these Budget expenses will be paid by the Foundation on behalf of the Artist, and not directly to the Artist.  The Artist will keep an accounting of all unit sales of the Recording and any related revenues. The Foundation or its duly authorized representatives shall have access during normal business hours upon reasonable prior notice for the purpose of audit and examination to any books, documents, papers, and other records that are pertinent to Artist's revenues derived from the Recording.

Tax Treatment: Any income realized by the Artist that is derived from sales or activities related to the 2005-2006 Austin Music Incubator will be taxable to the Artist as ordinary income, and any such taxes shall be the sole responsibility of the Artist.  The Artist must make its own determination as to the tax treatment of monies paid to the Foundation by Artist.  The Foundation makes no representation, guarantee or indemnity as to the tax treatment of any funds paid to it by the Artist.

Succession; Assignment: The participant agreement between the Foundation and the Artist, and the rights and obligations thereunder, shall not be assignable without the prior written consent of the Foundation.  Notwithstanding the prohibition on assignment, the participant agreement shall inure to the benefit of and shall be a valid and binding obligation on any successor to the Artist.

Terms Subject to Change: Accordingly, the Foundation reserves the right to amend or modify any and all portions of the application, review, selection and program process, up to and including the amount of funds to be allocated for the Artist's benefit.  At any time, the Foundation reserves the right to terminate an applicant's or Artist's participation in the Incubator program with due cause.