f,ATE TO_ The folLowing material has been

f,ATE
TO_
February 27, 198i
MEMO
OFFICE
FROM
OFFiCE
-
SuBJECT:
APPLE (N.Y。 )CLAIM FOR SCRAPPED INVENTORY
The folLowing material has been prepared at your di.rection:
The l-atest Apple (N.Y. ) audit claim covering the period
9/I/69 through 6/30/79 includes a cLaim of $1,61-3,000 for
inventory scrapped nithout "adequate. . .detail-ed certificates
evidencing such destruction. . ." as follows (per Exhibit A,
Page 6):
Royal-ty Baseil on Regular Price Spread $1,024,000
Price Escalation
152,000
Mechanical Portion of Spreail
437,000
TOTAL
$l-, 513,000
The above amount represents the net amount cl-aimed after
allowing credit for the portion of the scrap for which the
auditors decided there were "adequate certificates of destruction". They arriveil at this on a sarnpLing basis ancl decided that 74.59* of the pre 1-1-74 scrapping and 91.58 of the
post 1-1-74 scrapping was "acleguate3-y certified".
(Exhibit A,
page 1-5).
As a
12 of the
sentences
purchased
basis for their claims, they cite Articl_e II, Section
9-1-69 Agreement (Exhibit B, page 3) the last two
of which read I'Capitol may warehouse records reby it hereunder against future orders or it may
destroy same for scrap, as it may cletermine. Provided that
Capitol will provide Apple with a detail_ed certificate evidencing such destructionr'.
Since the 9-l--69 Agreement is sil-ent on (1) what constitutes a detailed Certificate evidencing such destruction and
(2) what the penaLty is suppose to be, if any, for failure to
do so, Apple has decided (1) what it considers an "acceptable,'
certificate, and (2) that the penal-ty for fail-ure is the
artist royaltyr pJ-us the claim for price acceleration, plus
the mechanical license fees thereon.
Capitolrs position is that the provision for a certification of destruction was part of the form and not substance
of the Agreement to make it appear AppLe \"7as the manufacturer
rather than mereJ-y receiving a fixecl artist royal-ty. (Exhibit
C2). It is Capitol , not Apple, who bears al-l- the costs of
manufacture, inventory obsolescence anil loss, as vre11 as
dlstribution and promotion expense.
SIGNED:
r€rRM r669L REV. 6 t/78
DA
TO
OFFICE
FROM
OFF:CE
U‐
□
CI'
.''_
0い ' U‐
CMP
口 CRI□
日
SuB」 ECT:
APPLE (N.Y.)CLAIM FOR SCRAPPED INVENTORY
February 27′ ■98■
Page -2-
of the 9-■ -69 Agreement (Exhibit
are to be based on
B′ page 4)c■ ear■ y provides that payments
net sales.
Artic■ e
■エエ′ Section
■O
In regard to a penalty, if any, for failure to provide
certificates, it is difficult to see how any loss has occurred
to App1e. And in the event there hras a 1oss, it would seem to
be coverecl by Section II, section 10. (Exhibit B, page 2) of
the 9-1-69 Agreement which reails as foll-ows:
"10. In the event of Loss or ilamage to Appl-e
resuLting from defects in material , equipment'
and/or servi.ces furnished by Capitol and/or
negligence of Capitolrs personnel, Capi.tol-'s
sol-e obligatlon shall- be to have the defective
materiaL rep3-aced anil the services ordered by
Apple performed again wj.thout additional
t'
charge .
If Capitol-'s position is not
cLaim should sti1l be reduced by:
deemed
to be correct' the
l-) The mechanical- license portiont
2) The price acceleration if Capitol's
positl.on is upheld in this regard;
3) The portion applicable to lvlccartney
Solo Albums (due to the release from
McCartney). (Exhibit D).
Attachedl is a chronological history of cl-aims from
for unauthorized scrappj-ng.
S:GNED:
FORM 1669L REV el′
78
Appl-e
DAT[
TO
OFFICE
corli,
Oct Ecnt
orrrce
DctvtP
SuB」 ECT:
(N.Y.)
February 27,
Page -3-
APPLE
CI,AIM FOR SCRAPPED INVENTORY
J-98I
CHRONOLOGICAL H■ STORY OF CLAIMS FOR UNAUTHORIZED SCRAPPING
1. First claim for scrap appeareil in claims presented to
EMI in December 1970 by Klein and forwariled by EMI to Capitol.
Capitol- discussed the cl-aims internal-l-y and set in motion
systems to obtain certificates (Exhibit E through L) but did
not respond to Apple until- cl-aims were presented to Mr. Menon
in August 1971. CLaim for scrap was looked upon by Capitol
as Klein harassment to get other things he wanted.
2. Claim first presented to capitol in August 1971 and
cliscussed again internally (Exhibit M).
3. Capitol respondsto Apple 9-23-71 (Exhibit C) that
there was no basis for the claim.
4. Meeting he].d with Apple N.Y, in October 1971. Mr.
Carprs notes on scrap dj.scussion at that meeting is shown as
Exhibit N.
5. February 3, L972, Chaum reports that Klein wil-l- waive
the cLaj-m for unauthorized scrap as wel-l as most other
harassment claims for increase in Beatle royalty 9-L-71'
(Exhibit o).
6. February 1973 - Capitol and Apple propose settlement
that waives scrapping cLaim through November 30' l-97I
(Exhibit P, page 9), but settlement not completed due to
Kl-ein's departure from AppLe.
7. ,fanuary L976 - The P&F clairn mentions scrapping but
does not make a doLlar claim (Exhibit Q, page 3).
8. June 15, 1,976 - Tilli.nghast responds to P&F Audit
but does not mention scrapping since no doll-ar claim had been
made.
memo
S:GNED:
FOR'Jl 1669L RE\,. t r/78
9. current Audit Clain (Exhibit A) - Subject of 2'27-8L
to which this chronoJ.ogical list is attached.
TO
ttot
ai e*i r*
OFFICE
MEMO
APPLE IN.Y。 ) CLA工 M FOR SCRAPPED INVENTORY
February 27′ ■98■
Page -4EXH工 BITS
Exhibit
Ａ Ｂ Ｃ Ｄ Ｅ
Page s
6
4
3
current audit claim re scrapPing
9-1-69 Agreement - Extracts
9-23-7I capitol response to Appl-e
3
re scrapping
6-L5-79 Mccartney Release
I2-L-7O Gortikov memo re first claim
2
L2-9-70 Carp
4
1
1
L
3
4
６
３
２
■
０
■
５
４
Ｇ Ｈ Ｉ Ｊ Ｋ Ｌ Ｍ Ｎ Ｏ Ｐ Ｑ Ｒ
FORM 166● LREV 31′ 73
No. of
for scrap
memo re furnishing
certificates ancl
I2-I4-7O Burdick memo confirming
I2-L8-70 Chaum memo re scraP
),2-28-7O Tillinghast memo re scrap
I2-3O-7O Burclick memo re certificates
1,-4-7I Gortikov report to stanforil
L-26-71 Chaum, Tiltinghast anil BurClick
re scrap
L-27-7L Burdick report to Menon
8-23-7L First cl-aim presented directly
to Capitol
LO-29-7L Carp comments re scrap
2-3-12 Chaum rePorts Kl-ein remarks
2-3-73 and
2-27-73 Settletnent ProPosal1-76 P&F Audit
6-L5-76 Capitol response to audit claims
EXHIBIT A
1of 6 pages
We have manually summarized units
as Breakage &
Claims/Inventory
t979. Detailed workpapers showing the
Reports will be made available tpon
assified
to,
Adjustments from JanuarY 1, 1974 to
accumulation of'these units fmm the Unit
applying to these unit3 the regular buy-eell
request. We have caleulsted royalties due
based m escatation, ag well as the
price spreads, th€ increase in the price
computations appear in Schedules l0lr 10Jt
mechanicEl Portion of the Price spreads.
period in the amount of $186,204.81 in
lOK and l0L, which are summarized for
ts classified as Breakage & Claims/InvenSchedule 10. The total amount due Apple for
10.
tory adjustments is $6651122.48, as shown in
in the amount of $t6r'6r8.72 in
The previous examination report included a
selections SWB0 101 and SW 153 that
Schedule 4 covering inventory adjustments
The amounts included in Schedule 10
Capitol incorrectly classified as promotional
this amount. Accordinglyr the amount
for these two selection numbers are in eddition
vious report has been included in our
due from B&C/ Inventory Adjustmenb fDom the
$828,96r.20.
Summary of Findingsr bringing the total amount
SCRAPPED INVENTORY
Article II, Section 12 of your September Ir 1969 Agreement indicstes.that:
rr...Apple egrees to resell end Capito! agrees to FePurchase all of Apple's
records which are retumed to Appte by Distributor. Repurchases hereunder
shall be at the same prices as are specified in SchedulerrArr, as the cese mey
be. Recorde retumed hereunder shall be epportioned a3 between ttcords
purchased by Appte under Article II, Section 2, and those furnished by CaPitol
to Appte's Distributor under Article IIl, Section 8r in the same ratio as
obtained in the applicable purchase or purchases. The amount of credit or
refund shall be comPuted in accordance with Schedule "A". Capitol may
warehouse records repurchased by it hereunder against future orders or it mey
destroy some for scraPr as it may determine. Provided that Capitol will
provide Apple with a detailed Certificate evidencing auch destruction. . .'r
From September l, 1969 to December tL, 197t, Capitol accounted tor movement in and
out of inventory by use of their intricate comPuter system. Each month Capitol issued a
Consolidated Inventory Movement Report which indicated by aelectionr the rumber of
records clasgified as having been scrapped. As mentioned previouelyr we have summarized
these reports by computer (see Appendix 9) in mder to determine the quantities acrapped
3,
(tuarrqt
?o
corrarra
ora
Ltr'tlr
o?
tlaxaxrll^l,
SATIN. TENENBAU}!, EICHLER & A}L\IE&\IAN
EXHIBIT A
2 of 6 Pages
of each record for the period from September l, 1969 Lo December tI, I97r. In practice
capitol did not r€port these units to Apple, nor did they charge Apple with the cost of
such scraPPed tecords.
ヽ
During this period Capitol serapped approximately 4'9001000 singles' 218001000 elbums and
4001000 tapes or e total of Irl00ro00 records. we eelected e test eamPle ol 2tt95r862
records or about l0% of the total to ascertain whether serap documentation contained
adequate tr...detailed Certificates evidencing 3uch destruction...rr 83 stipulEted in your
agreement. As part of our test we analyzed the procedures snd the nsture of the rePortg
used by Capitol to document the selections and quantities scrapped. It included a rcview
signetures, location, dates, quantities, special instructions end suPPlementary
documents. capitol provided us with documentation for ?ro13ro82 units or 84.1% of the
units for which documentation was requested. From the inception of your SePtember It
1959 agreement Capitol utilized a Scrap Authorization Form which included a designated
space for the signature of the person who actually destroyed the productr as well as the
following set of instructions:
of
■.
Destroy quantities listed.
If e sPecific quentity is to be held we will lndicate
3ame.
２
３
Report quantity of inventory scrapped
if difference exceeds a st8ndard
Pack.
All locations: Retum two sigrrd copies to sender immediitely after iteme are
destroyed. Copy when signed, will constitute a ttcertificete of Destruction'r by
vendor, plant or distribution center. Show date of scrapping. Signature must
be legible.
These euthorizations, copies of which are included in this rePort in ApPendix l4r indicated
that proceduree wer€ established by Capitol to [certifyrt thet scraPPing took place and
that such ce.tification was in tlle form of scraP authorization which wes to be signed by
authorized personnel who observed that the scrapping actually took place.
Capitol supplied us with a copy of 'Certification of Scrapping Beatle Records and Albumsl
(see Appendix l4), which they claim was sent to Apple Records each month with the other
monthly t€port3. For example, the document for April, 1971 which was 8igned by
(
う6
(Suutct to qoxrltf?a
ota
Lttraa ot ?l^talxltl^L)
SATIN, T&\ENBAU}I, EIC'{I.ER & ZII}IEL\TAN
ctttltll! trrat'lc accouLtatata
c.
Khoury, Vice President and controller
of capitol
Records, Inc., reads
as
' follows:
r
.This is to:certify that the ordinary business records. of -Capitol Records, Inc.
th"t the pioduct identified in the attached exhibits has been scrapped
""""J
during the Period indicated.r'
We have provided copies of this form to counset who have indicated that such forms do
not show evidence of destruction as required by The Agreementr end therefore, should be
disregarded for such purposes. These documents merely assert that Capitol has the Proper
documentation on file, but our examination proved otherwise.
Our examinetion revealed the following exceptions to the Procedures outlined on the
Scrap Authorization Forms from September I, 1969 to December 7I, 1973:
１
２
う。
No signature on authorization form showinq evidence of destruction.
No documentation was provided by Capitol showing suthorization or evidence
of destruction.
0signature't of person who wss supposedly certifying destruction $/as actually
tbrinted" on an unsigned authorizetion form.
／ ヽ
We have discussed the issue of ecrap documentation with couneel who have advised us that
Capitolts documentation is acceptable if substEntielly all of the required information was
filted in and if
it
was properly aigned, showing evidence of destruction. Any failure by
Capitot to provide documentation is corsidered as unacceptable.
we have found that out of the zrc.It rO82 units for whieh documentation was supplied by
capitol, documentation for 227 1979 units was unacceptable either beceuse there was no
signature evidencing the destruction or the signeture was printed. In addition, Capitol
failed to supply us with any documentetion for 5821780 units. Based on the total sample
of documents tested, 2r)951862 units, Capitol provided us with acceptable documentation
for 1r785rl0J units, resulting in a tbatio of eccePtable acrap dcicumentation'r of 74.979o, as
ahown in Schedule 1ll. The rrratio of acceptable scrap documentetion" is defined for
purposes her€in ss the ratio that the rrumber of units for which adequate evidenee of
destruction has been provided bears to the total number of units tested.
,7
(
(● UWEC7
70 CO“
001-贄
。r
TRAH● 田 ]■7AL)
"EH7●
SAIN.TENENBAUM,EICIIER
3 aMヽ ERMAN
“Ｘ国 Ｈ︺ Ｈ︼ ン
い ０ い い ｏ
Ｑｏ ∽
，
Edward
EXHIBIT A
4 of 6 pages
`
We'have calculated the dollar amount that would be due you on sll units classified es
scrap from september t, 1969 to December tl, l97t in schedulee llA-ltH which are
summarized in Schedule 11. We have given Capitol credit for the acceptable documente'
tion they provid;d by applying the t'ratio of sccePtable scraP documentation'r to the total
amount of royalties calcutated. Our computations of tte amount due you ere summerized
in Schedule ll, which totals $9291955.58 for the period SePtember l, 1969 to
December t1, 197t. The previous examinstion report did not include a claim for royalties
due on units classified as scraP. Accordingly, the amount due you appears in The
Summary of Findings under the heading lAdditional Amount Due for September I' 1969 to
December tJ-, 1973.'l
For the cuFent examination period from
January
!,
!97
4 to
June
tO, 1979 Capitol
scrapped approximately 517001000 singles, ,14001000 albums and 119001000 taPes, or a total
of 1110001000 records. We selected a test sample of 21091'130 units, or aPProximetely
total, to ascertain whether lhe documentation supplied by Cepitol represented
adequate evidence of destruction. capitol provided us with documentetion lor 2ro221966
or 96.7ch of the units for which documentation was requested. Our examination of thiE
period revealed that beginning in 1974 CaPitol chEnged their procedse r€garding 3crEp
nCertification of Destruction of
documentation and began issuing a document entitled
Beatle Produet From Inventory Designated As Scrapr' (see Appendix l4).
19% of the
It
showed certification number, plant location, selection number, quantity as well as
the f ollowing stetement!
an employee of
the
Department certify that I personally observed
the destruction of the above quEntities and aelections, which destruction began
,1を 。
, 197_ and wEs comPleted
The product was destroyed bY
Signed
Although Capitol continued to use Scrap Authorization Formsr they no longer rupplied
them to ug es documentation for quEntities 3craPPed. lnstead, Cepitol provided the above
38
(
υ●JEC7
7● COlt"● 旧 0011-E■
07“
II●
:77AL)
“
`●
む出N
NttBAUM,日 CHLER&ZIMMコ
SATIN,■
C―
〕
ア:● ● PUBL'● ―
●U‖ 7▲ l17●
EXHIBIT A
of 6 pages
certificate of Destruction which was to be aigned by authorized o"rronn"i
observed that the scrapping actuelty took plEce. Counsel have advised irs that Capitol's
documentation is aceeptable if substantidly all of the required information is filled in and
described
is properly signed, ehowing evidence of destruction. Any failure by Capitol to provide
documentation is considered as unacceptable.
if it
Our examination revealed that out ol tlre 210221566 units for which documentation wEs
supplied by Capitol, documentation for ll0r000 units was not acceptable beceuse there
was no signEture evidencing the destruction. In addition, Capitol failed to eupply us with
any documentation for 681564 unils. Based on the total sample of 2109I'110 units tested,
Capitol provided us with adequate documentation for 119121566t resulting in a rrratio of
ecceptable scrap documentation" of 91.5% as shown in Schedule llN. We have manually
summarized units classified as Scrap for the period January l, 1974 to June tO, 1979.
Detailed work papers showing the accumulation of these units from the Consolidated
Inventory Movement Reports will be made available upon rtquest.
all units classified ss scraP from
January l, 1974 to June tO, 1979 in Schedules llJ-llM which are summarized in
We have given Capitol credit for the accePtable documentation they
Schedute Il.
provided by applying the I'ratio of acceptable acrap documentetionr to the total emount of
royalties calculated. OUr computations of the amount due you are summarized in
Schedute ll which totals $6821751.56 for the period Jenuary L, !97 4 to June tO, 1979,
bringing the totet Emount due you on the records classified as scraP to $tr6l2t707.14.
We have calculated the smount thEt would be due you on
RECORD CL∪ BS
A.AND CANAD
No provision could be found in any of your
rights to Capitol. Section IV, Paragraph 7 of
rr... The paities hereto intend
granting record club
Agreement provides that:
otiate with Longinqs
to
distribution
SymPhonette
ved from Beatles masters through
Canada and/or Mexico on a nonenter into conttacts with other
Society, Inc. for the release of records
the Capitol Record Club in the United
exclusive basis. The parties elso wish
and/or Mexico for distribution of
record clubs in the United States'
8 royelty of et least 9% of the
caid records provided that auch elubs shall
price of records to membersr of which Capitr would be entitled to l-ll4% and
may be released through
Apple would be entitled ro 5-ll4%. No auch
first Eleese in the United
any record club earlier then 6 mmths
States. . .tt
39
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277
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︱︱
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﹁［︱
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ξ卜．ヽい０．︹０い＾︻
＾ゞ．一ヽＣ、いいい。一
¨ヾ．●ＮＣ＾０〇一．︻
引引﹃︲﹁
ｓヽつい 嘲﹁﹁渕測﹁
﹁﹁ヽ創﹁ａ引﹃胡倒
。
・ヽ 一
︵ヽ
ｌミ 一ヽヽ゛
ＪＪ ロコヨЧ劇
０い。︵ＣＣ．卜０
﹁﹁ ﹁ ＝ ﹁ ︱ ︱
●一．一一一ぃ０い
゛
︵ハ．
卜＾０＾
卜い一
０い。い０卜ぃ０トト
卜Ｎ．い︻一．い一
ヾ︻．ヽい０．●卜Ｎ
Ｏい．ＣＣＯ．い０一
一嗜 ＥＣＮぃ●ｎ︵．Ｎ
Ｎヾ．いＯＣ．いい
い０ いい︻＾︻Ｃ卜 一
ｄ ∃ ＝ ﹁ 悧 劇 ∃ 司
﹁ ｏ “理 っ ２ ● ０
︺ Ｄ Ｏ い ］ ¨ト コ く ＞ Ｃ ビ
り ● Σ ︺ 卜■ 口 ゛
一
０ 一 い ０ 一 ︻ ．︻ ″一
一Ｏ ｏＯ ｇ ０ ０ ｕ ∝ Ｚ Ｏ
い ヽい ︻ ．Ｃ ︵ り Ｚ ﹁ ‘
Ｏ Ｕ 一Ｌ あ ∽ く
卜 ¨︺ κ
∽︺ 一卜 く 口 ● 申亭 一
Σ く ×Ｌ
ＣくＯ ＬＯ Ｚ ＯＦ くＺ 一
゛０ ビ００］“ 〓ＯＦ¨
Ｚ 一 ″ Ｏ ｇ Ｃ じ リ ビ ｕ オ ﹄︵一く
︵Ｚ Ｃ 〓 く ビ うこ ビ Ｃ ● Ｙ “ Ｃ ＞ 〓 ︺ Ｚ く ︶ パ ︶
α く ‘ Ｏ ｏ ｏく
■ ０ 一Ｃ Ｏ‘ ｏ ｐ ２ ″六 ｖ っ 。ψ。 ●
一
ぃ
一。 ● ２ “﹄ｏＯ ｃ ∩︶ マ 崚 ”∞ ● ﹄● ■ ´ 。 “
︱︱ 〓
目 ﹁ ︱ 創 劇 ∃ 司
一
〓
〓
一
二
〓
´
一
〓
一
‘
︵
︹
子
つ Y」 Σ
L
し
00
く●
:nade as of Septcntbcr
■. ■969′
betr.reen CAPI
deconus, fNc., a
1750 North V
Street, IlolLyteood, California
,Capito■
'り
, CAP
RECORDS
Delaware corpo;a
on,
Ca■ ifornia
ca■ ■ed
9oo28
RECORDS′ ェNC.` a
■700
INTC.′
=躊 pp■
oり
B
■750
california corpoiation,
(callecl
9OO2B
DISTRIBUTING CORP.
,
A
North Vine Street′ H。 1lyv70。 d`
t'Distributor`')and AP,LE
york corporation′
Nev7 Yo】 ]ζ ,
。/●
New York
ABKCO INDOSTR工 ES,
■Oo19
(callod
.
ito■
has heretOfOre acted as
under certa■ n contractual
C &
MUSICAL
工N■DUSTRIES`
L工
TED`
Mェ
dress is Blyth Road` Hayes`
(
respect to Beatles, naster.s i
nov licensed Apple for the
da
vith respect to Eeailes.
re■ n ca■ ■ed
the
“Licensing
attached hereto) ,
'hTIEBEAS,
Capitol
and
faciLities for ind is
engagecl
.in'the . processing and pressing of records derived from
ぃ
ned by others′ and A
and press records through capi
WIIEREAS, Distributor is
´
t
and
wil■
se■ ■
ing
recoras in the tttrlited
havO rOcOrds fOr distribution
Ｓ
ｅ ｌ
tnasters
desires tO process
facilities, and
ongac」 ed
in distributing
tates and Apple has
and
recoras Distribllto】
:
EXHIBIT B
2 of 4 Pages
doing.
if
such fai■
caused by a force
or- dclay
,is
■c
nOt bO
majcu-re.
(b)
faitur! to order ot
accordance
vti
its de■ ay in
sha■ ■
take de■ ivery of
liable to caPitol for
records frgm capitol in
th its obligations under this Agreement or fol:
such failure o! deLay is causecl
so d0
by force majeure.'
■0。
resulting
in the event o■ loss or damage to Apple
from defectS in materia■ l equipmentr and/0エ
services furn■ shed by Capitol and/。 r ne9■ igence of CaPitO■ 's
personnel, caPitol's sole obligation shal1 be to have the
defective material replaced and thc services ordered
-_----.charge.
additional
rvitlrout
again
performed
Apple
.
．
０
０
︼
０
り
０
●
０
口
０や 口 ０ ∽ 守 や ∽ ︼ ¨ ︺
Ч
〓
．
日 。 “ ︼ ０ ︼ ０ ■ ● ぃ ● ﹁ 〓 Ｈ ” ● ∽ 、 つ Ｏ ｏ Ｏ ■ ０日 ● ０
” ．ヽ ﹁ ● ０ ﹁ ● ｏ Ｏ ∽ 。ぃ
(、
by
viI1, at the request of APPIe, store
Beatles masters at Apple's sole risk
no liability
in. resPect of said
not fi.rnited to loss from neg]igent:
ie in. the possession of caPitol..
masters, matrices, moth
and the
■ike,
process
pressinす of Apple'S
●日
・
予
by・ or
for d,pitol for use in the
ords shall be Capit01:S property.
ROぃ
r星」区=二望工≧二=童ニユニ be
=●菫彗
asコ 日そアできコ■書ほィ bO.
apportionod as betWeen
ds purchased by
--4_
thos'c furnistted
APP
Ly¨
島鳥
to
EXHIBIT B
3 of 4 pages
(
or purclnases. Thettn10ttnt of_credit Or
●●mputed
ⅢAⅢ
th SChedu.e
h‐ aCOげ0…
.Capitol may
warohousc rocords repurchased by it h
destroy same for scraP. as it
future orders or it
tnay..
determine. Providcd that capitol
with a deta■ ■ea Certificate evicl
1
7
such destruction.
i) ooes not itse■ f manufacture
く
to■
●ny
ide Apple
\'ri11
any other sound reproducing dbvice,
type of rccoras
I
whether now knovrn.orl hereafter kno\'m, other than standard
01,k Fecoras, 8-trざ
き
卜,,pb
rOCords Or tape rccords in
!be.cassette conrig;.rf artion; or. (ii) if caPitol should
(
for
.tI
any other reasonldeem
it advisable to license 4-track
icerSe othOrs
tapes or r:e. to ieel tapes, CapitOl iay ■
the rェ ght to lnan、 f'91」 rO,
eli′ exploit and aistributc in
rds derivedofrom Beat■ es mastors.
the unitOd states
Capitol *"y gt..r,t to lits licensees such of the rights
:ど ivi・ eges
i li :::
whiChAppl卜 grants to DiFtributor a, Cap■ t。 1
=
favorable teins in tlle negotiatioll
deems nocesSary to
for suCh
■iCenses`
P
ヽ16● it`qua■ t6二
ded dapitoi
↓
iゴ ■pa, to Ajple an
iSt
er Cent 8fiOo・/. 6f the reta■ ■■
Pride of il■ rOCordS
ved from Beatles masters sold
such licensees, cOmpu
anil.paid in accordance with the
:t,FmS ar1 3roVil■
Ong if Aalondum No.
. attached heiet。
notwithstanding,
‐
(
and
qaP,t。 l desiresl erOa
t。 ■icensc
と‐
■n
bY
・
tho ovont
to Others the rigl,tS
EXHIBIT B
4 of 4 PageS
● ヽ
(
・
…
つ ０
■0.
At the
encl
of
each month, Apple
invoice Distributor for a■ ■ records purcl,ased
r,rill
Distributor
hereuncler during said mollth. .Wit}lin not rnore than
$rirty
(30) days after the encl of each month of the term, and
thereaftcr. so long as niay be requirecl, Distributor r.ritl
rencler to Appl,e a statement of the net
rocords sold by Distributor during such month′ ana the
71,ich pistributor is entitled` and′ conctlrrcnt■ y
crodits t。 ●
l.
to be
due
lrith no cash or other dj-scount proVicled that
Distributor
(
may subtrarct from such payment and pay
to Capitol on Apple's behaLf such
sums as nay then be 'due
Capltol under Section 2 of Article II
an d such payment
shal-l discharge Apple's obligation to pay
か・
such inAebtedness.
J■ ).′ /.
c. Section 1I. is added t
. full as follorvs:
" lL. it APPLe requests
エエエ
tO read irl
t DiStributor a■ ter
e records or ■nc■ ude
additiOna■ e■ ements
ilys:[:k3::lig:iし
v7ith the rosu■ t that Distributoris out―
tn:]iこ
ti[p:::量
. ::r
hlt :][ilin:f I::::量
as set forth in caPi 1ls then current
r DiStributor wil■
!ianufactu!ing
t and Apple willaccede to APPlers re
un
equal to 50 Pel:cent
a
Dis-sributor
i.o
PaY
et cost PJ.us 10
of such excess out-of
percent of such exces out― of― pocket cost
head. "
is an allowance for
こ3
dilect
:
●
September
:
ApPle Records, Inc'
1700 BroadwaY
i.i-Y."r.,
23,
■971「
'
\
New York 10019
EXHIBIT c
■ of 3 pages
\
\
.t Silvgr
AtEention: Mr' Joi:l
Dear
\
Joel:
!
of the
greatly "'itP:i:t9--:o- see much
t'oPen
itemstt
wha! you calL
contenE of the scntaof"s of
to
han<ied
thi"i'' Attttt
on Beacle ".'a oo"-sll;i;ago;;;;t
i+ Netr York'
;;";i.;;-;";eral weeks
I
I
urusc say
I
was
say rrsurprisedrr. since
t
been
Capiiol anri APPIe havesince
agreeinent
operating ,r,'4"- tn!-st"ti"' ptoduct
since 10-t-699-1-69, and cire ""i-g"a.iit agree^nent
pre(2 years!) and chis i"-.rr" flrst_tine Apple has
´
● ⋮
)-""i.a-t""rt a schedure to caPitor'
■scusSed
)■
a few Of the matters
etl PoSitiOn on others.
LetiS disCusS tie ,Chedulell_ln.littirll[:。 leaillh:lliuit
工
niltitth
lii::illillil::i:こ ::::r・ 1軍
icll:::1と
:::」 と
dollar imPor:ance '
189,089。 ■9
.80,508。 ■6
61,103.14
24,050.58
John Lennon/?lastic ono
ToEal"
)
978.320.13
o
Before d'.scussrng indivlclual
remind ourselves of cerlain
EXHIBIT c
2 of 3 pages
一
chat memorandum:
rtttre parties will ttempt to adopt a buy‐
agreement, subj ec to approva1 0f EMI and
Ttre Beatle agreement Ls i tiroyalty. agreement.
The lrord IroyaltYrr i used throughout tha!
Hor.rever as a coullesy co Apple
menorandum.
,and
Eo casE
itoi was willing
at its request
t'buy-selltt
'
the contrac! in the formI: of a
the closing senlence of
agle€ment as s tated
69 WhiCh Was signed by
and Stanley corEikov for CaP lo1. This agreemenc nakes
the following PoinEs quite c ear:
8‐ 3‐
︰ ・ ︱ ・︱ ■ ・︰ ，
um agreemenE dated
K]-ein for the BeaEles
69 were COnta■ ned in a
・■
・
・
9・
● ● ヽ
ic principles in the agreethe answers.
ffect
dlents since Lhese naturally
r the new BeaEle conEract of
The pr■ nciP■ es agreed upon
ユ)
/.
of 34
se■ ■
t authorities.0'
necesSary gov
CThat the cOntreCt WiS Viewed by both Cap■
lo■
and ::lleiiSfirti:FaliIIa:星
:::m:;ttl:tI:[t:[a:ling
1969, initialed by Allen Klein,
which conditioned ch{ effectiveness of the
Septenber 1, 1969 codcracc on the Bank of England
September
■2,
I
2)
permitLing EllI ...Eo ttke credit for any royalty
i.y*""t (lxcluding mechtnical license fees) rna<ie
by Capitol co apple. ... f)
:
The increases in the rolalty rates over the
previous Beatle royaltyilaces !te!e contingent uPon
product f1ow, and
I
3) A ce■ ■ing was placed on publishers fees as follows:
penalty
againsE
=:The BeatleS W■ 1l absor as a
aforementioned ceiling. tt
royalty any excess of
Although the eordii:g
Caplfol has LncerPreted IIT:n[:° 1::lud:illl::ril
■y pa■ d an ■nCreased
a1so, and has gratuit
rthere liie Pub ners fees are less than
royalty
tt
rtceiling.
the
I and Apple-Ner'r York, which is
9/1/69 Agrccment ben'teen CaPi utpd
by both parcies and-is at
a conplete docr'uircnt, full'Y ex
Eion- agrcement. Applers PosiEion
face a nanufacturj-ng anri dis
●。ntractually
differs fr● m Ca
1:s philosOPhiCal POSitiOn。
states that lhe Beatle contlact of 9lL/69 Is really a royalty
contract and refers to the signed agreement of 8-8-69 and certaln Passages
Ln t}jle 9!L159 contract and related conEracts to Prove it.
2. ApPle states tt.e 91]- 169 contlact is at face a manufacturing and distrLbution agreemenE and suPersedes any prevlously dated agreements.
FGpitot
・
`・
OC
34
I:V“ ::[liiliCII`::rapped RecOrds, 9′
30/70 11:ら .5,96■ .77
:i電 :1よ ll:allitt b[II: ::I:r
non-Beatle save that Apple Ls not entitled
to the tinyl sc P SinCe ℃
l absOros tie ninufaCtur■ ng cOst,
=,it。
but Apple
be_entirled
io any lesale in the seconda$;;;ilr
0■ 5ome sort
a forrnula basis.
B― ゎ
Appl.e riispures Capi.rol.
'! iigh! !o:
1. Scra? App:.e Records t iihoui pe;;.issLoa.
2. Scrap Apple Raco;ds rd.:iouc cqa?ensalioa
!o Ap?le.
3. .llhether or noi ihe ::eco;Cs weie.aciually.
scrapped.
a. Ap?le h--:
been p:ovided !ri:h lrhar ic
_co::s!ders coiiipeieni eviie lo.to accep: thai Ehe ?ecords
by capirol ;;';;;?";;"."-t" .:e i.n
lndicared
--'act se;appQe.
鍬
_
1,1[量
e5:.:::f=:彎
°
尋
Satitt requeied
]。 iC転
=摯
il百
:■ :■^:F::i。
::「 ::^ξls・
:::ulili]:::::P:::・ ::こ .
APPle'S
APPl:]:.:Ialiti:11:hs::[[d:h:r:::こ
Cia■ . isII:‐ l[I::d:``[.:F:F曽ξ [sこ=Fr:::ill=:輩
=:Lttiyl:SI:錯
:=」 "::8:i:FallI::
農
JPlTOL'S PosIT10N:
;o'
SUblMARY:
・・
b'
the contlacr ;t rhls. trEe
""1." lrl':n ::;"1""!1ili:t:ff":'
1:plilii:i:::::::こ
:]:it:1 :]hi:灘 :::d Apple!s recOras without:
or sub.l*ed satlsractory
"- *j;::":,?.:ili"'ff:;"": i.ii'ilii!1,of".o,,a.,y or othelr,lse, ror
tbus resulting in a possible losa of profit
to
Capitol cannot prove t
consider,.
;:::;'ffi:"J: *j:-*I::i:":o'"li..pproe
f
.a
2.
APPIe isc.ii ror
9エ
.
ExHIBIT c
3 。f 3 pages
●
:ia::r:ip::こ ::::::普 iiti::・
υ
plove thev eere scrapped,
",!i"ir,-li,!ft*.:i*lr:::{:r:$i:r_J:':':ilil:':;
entitlei
t.-ii" -i"."ii. ff:'.::i..:tl,
value in a secondarv
"
Darker.
iJ"--;;.;".;:"-:":sonable
provldes that ca-pltol ;rt-;;;;;
"t. .Ji.iii."!i" contract
records
-il-[ir-"i.L"
"ni
tt"r."uppii
.1.'no-i;;;i";;:":s ln or.thescraPPins' tblch it iras aonel
_
contract for sales ln E secondarv r:-t or
I rxgtsrg
LEGAL DEPARTMENT MEMO
(
DATE
TO FILE
」une ■5, ■979
FROM
TITLE
SUBJECT
口ごL x二 LEASE
a
The oriqinal Release was vaulted on 3/9/79 anil given
Release ailSEtt1enent No.
on 6/L5/19
A second and rnoilifieil Release was vaulteilEastman
on a
John
by
anil
initlaleil
after changes htere made
copy of the original .
(
t
:oiM 7315 at3
A - AcIIoN NEcEssARY 8 -
CONTENTS ESSENTIAL C
-
o
:l of 4 pages
INFORMATION ONLY
。 一
一■
Lヽ
Re= cRエ ー5}
(1:LIや
111::キ
AGREEMENT dated
f
,
」anuiry ■′
・
=
′ 'X:IBITP:g,s
979 between EMI RECORDS
,
LIMITED′ CAPITOL RECORDS′
■■36
IINC・ ′ CAPITOL
RECORDS―
EM1 0F
Ointly and Severa■ ■y
CANADA′ LTD.′ and TOSHIBAlEMI LTD. (う
:Capit。 ■°)′ and MPL CO卜 lMUNICA―
referred to hereina fter al ・
TIOr'.*S, INC
- and
IIPL
TIoNs, LTD. (jointly and sevto as "MPL").
erallY hereinafter refer
rT IS !{UTUALLY AGREED AS FOLLOITS 2
t^tith
MPL bas Previously conaucteil an audit of caPitol
-
resPecttocaPitol,saccountingsforsalesofpbonograph
andl
recordings embodying the Perfoftance of Paul uccartney
April
or I'lings which audit resulted in an audit rePolt dated
, :j18 (the "Audit Report") '
conFor One Doffar ($1'OO) and other good and valuable
sideration l'1PL on behalf of themselves' their heirs' executors'
discharge
successors and assigns hereby fu1Iy release and
clairns
Capito)., their successors and assigns from all rights'
have against
and actions which I1PL, its successors or assigns
caDitol, its suqcAssops and assigns -a: set forth in the Audit
21
(
i:6s-M!"ccuracv or
n###
il
i,";
:"*.'j"
,\
itb 1' s
for
accountj.ngs ttr{+Pl with respect to the Payment of royaltie!
the individual recordings of Pauf l'lccartney and,/or l'lings through
the accounting period ending DecenJrer 31' 1978'
l
cap
一´′
一
′︲ ヽ
‘
LA●
●
、
This release iS
(
■● ■■
υ
3 of 4 Pages
_
■lmited
tO the abOVe and is With
reSPeCt S。 le■ y to the individua■ reCordings of Paul
Mccartney and/Or WingS.
ThiS releaSe sha■ ■ not in any
｀
｀ τ
l]l::rti::lyp:itinifC:iinialir[Plia[::iv[iCi::lelespeily
l)く
宝
ng:1雀 r』 Iy
き需
I:フ 百
tO Beatle recOrdingsiof Paul MCCaltittyざ ヒ
period after December 3■
, ■978.
し
twべ
ThiS releaSe is not in any
manner construed tO be an admiSSiOn of anY nature WhatSOever
l●
ith respeCt to the prOpriety Of Capェ t。 ■=s methodS Of ac―
counting or the acCuracy thereof.
This release iS not in any manner rel`ated to and Sha■
nOt Oe in any manner effeCt any Other Cla■ mS Of any nature
whatSOever by Apple Records′ Inc.: ApPle COrp,Linited, Ceorge
(
HarriSOn,
」ohn
be an adm■
ss■ On
1
Lennon, Richard Starkey or any other third
11)Or any
Party agさ inst capitO■ ′ EMI Records Limited (E卜
third Party and ヽわOC this releaSe sha■ ■ not in any manner
and/。 r
of ttny nature WhatsOever aS to the propr■ ety
accuracy of accountingS rendered by Capitol EM1 0r any
other third Party With respect theretO.
ゝκ
げ
(
L_ド ふ
｀
￨
ヽ
・
(
(
This shall be
(
?*:;";'n3n""
tbe sole agreement be-tween the partles
with respect to the subject matter of this release- This
agreement shaLl not be amendeilr. altereit, or rnodified except in writing duly executed by each of the parties bereto anil shall be binding on if,t" parties lrereto, their respective successors and assigns and is entereil into and
sha1l be construed by the laws of the State of New york.
.
RECORDS′ INC.
工TOL
RECORDS―
=HI CANλ
DA′
LTE
HIBA― EMI
MPL COM」 U101CAT■ ONS′ INC.
Ｂ
ヽ エ
\t''tz.
MPL CO】 ■lUNICAT10NS′
By
\l-
LTD。
irl-
」
ι《じ鵜
.
EXHIBIT E
l of 3 pages
TQ
′
｀
こ
￨￨′
OFFICl
Capib17H
DATE
MttMO
FROM
OFFICE
sUBJECr:
kn
Wood telePhoned me from lrbw Y
of Allen Klein,froin whchレ n Walked
1.
to state the following results of his confrontacion
'because of the atdtude of Klein:
As counterpart of EMI's using the
Apple artjsts,
on of Ringo Starr as rationale for the
Klein says that the inclusion otW
tes the Capitol,/EMl right to release
/aoa"-l"/
the album as intended.
its agreements with Apple.
2.
Capitol has been breaking various pord
3.
Klein intends to institute an audit of
4.
Capitol scrapped without auttorizadon 75Q 000 Apple abums.
of
beginning the period September
Capitol is not consuldng with Apple in re
despite contrac$al obligadons.
6.
Capitot is contractually obligated to get
producu yeq Capitol printed 200,000 tape
from the album without suthorizarion.
Klein stated that Apple and tlre Beatles are willing
recorded product containing a Beatle performance
provided Capitol and EMI negotjate a new royalty
nm to dle hgher b"bp“ msw agreed tO fo,a
宙
SiCNED:
I'
1969.
to clearances on press advertising'
l for any cover art on Apple
using an illustradon different
sign an agreement recognizing any
lly as a "Beatle" album;
with escaladons beginning right
r
point in time.
EXHIBIT E
2 of 3 pages
API'LL RICOド む5
S′
1'LDULE OF ll● NI〔
:r
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Canad
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ian
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Sa
Sa
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llβ ,8'1,.80
S 105,118.79
,,96.56
88,s12.86
les
Ｌ Ｆ
I'romot iorra
I
R(,cor
:3,731.Ol
1,2,C169.39
50
,r27 , t7
30!617.39
57
,69:;.\7
395,837.19
dg
Intercst.,(tnru 7 /3t /7,
I
S
Duc
715,f)61.77
Scrappcd Record s
Tota
Due Apple ll
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ExHIBIT E
3 0f 3 pages
__
ー
A,
- Capitolrs conrputdtion
shou I d be l7-i:i" of
i nd icoted in the Buy-Se I I Agreerrr:nt
. lit,.n,-21_la !e s
I
lr.r
s
cori.prrtcd inct,r , .", lン ・
rtr ta i I I ist I'r CC,
Articlc :￨, Sect idn 3.
co|rLcl rate
ror the period 9/l/69.through 5./30
$ldr,l18.79 as opposed 1o our figu
a balarrce due Apple Rccords of $13
7i
of
0, Capitol ls.f19urc,a5
of sl18,8′ 19.80 }ctav il,9
31・ Ol・
3)立
tcd tlr.... l;lr;d ian roya I t ies
9d」 堅1-Capitol has
(,il…their propos<:d.rgrdenrgnl. I lr.r c(n puted tlrc roy.'rlties on a
straight ariist ro'y'alty basis r.ritl, t any t.op),ri9lrt dil'fcrent ial
tor the period 9/l/69 throul,li
6/l /0, Capitolt:i f igure r,ro s
.ou
r f i g e <'f $til7 ,59'e .r(, lea v i ng a
$tt2.2 ,969 .39 a s opposcd to
balancc due Applc Rccords of S50, 7.17.
C)
' Capitolrs
lkrxic:rn roy;r lt i c s ' arrt('u tr ( {: d t()
uscd in C.rrrircli.rn rc'yalties,
$30,617.39. Us inr; Lhe sanre ha:: is
h9
l;r nr.r due Apl,lc Rccol'ds
ttgl&p.ff-l-e.-LS.t
凛
群ヽ
納精蒔:凱 "λ “■
D)
'
.
- Capit.olrs n,r.,nthly rcporting
incl ici.t,-s consida det;rilr cl certificate
e'vidcncing such dcstructic'n .rs provided for in Ar.t iclc ll,
Scctiorr l2 antJ accordingly u,, havc bil lcd Capitol for the
!c-r:lp-qd.lS-Lc:s-
croble scrappings.
We hove n.-rt rcc,,rived
afot cnerrt iorrcd scrappcd sales.
E) lfqiolj-olSl__la lgs - Art ic lc I I I
Apple to scll to distributirrs,
free of chargr oi
' distribution
disk jockeys, radio strtiorrs, r
ct idll 83 prorid..s for
d
iscount, rccords for
rccipi*nts.
press and ollrer simil.rr ctirtonr:
records so distributed sccrn
we are bill in9 .Capitol for thr
of
h
The quant
igh,
t he re
ity
fore
t
F)mterostithru辺 蛍″2)‐ COn
Klein and larrucci at r.,hich ti
would pay to Apple intercst
On
Accord ing ly a schedulc hos liビ c
has bcen accrued at a rate oF
out stand in9 balancc at tlie
hc ld by |lessrs
s 691gs6 th.rt C.rpitol
thc outstanding lralance duc.
r lr|.lrdrcd t','lra relry int(.rost
.,, per annun based upon the
it
of
r'r.'r
eirclr month.
.
DATE_
TO__
Decer,ber
9
EXHIBIT F
■ 。1 2 pages
1970
Capbl,M
OFFICE
MEMO
FROM
OFFICE_
KtEIN,/BEATLES/APPLE
You each received copies of
and the attachments .
See my handwritten
commen
ts
meet to revievr the "facts", the
vrhat cRI did is supported by a si
eil by strlc's "deal memo" and the
ber 1, 1969 agreement with Apple
Several of the footnotes at
's
memo
of Decenbcr 4'
l97O
the attacheil copy. You should
act situation (i. e. , whether
ed contract or must be supportf,nedl amendrnents to the SePtemcords, Inc. (N.Y.).
eil to Kleinrs schedules are
not understandable to me.
Can we furnish the certificate evidencing destruction
(*'D")?
g the charge that the quantity
Do we have any way of re
of promotional records was " rdinate ly hight'?
Attachment
OEc 9
SiCNED:
PORM :669■ 56′ ,0
1970
DATE
TO
OFFICE
FROM
OFFiCE
SUBJ日 富 =
lhlg
1111
coatim
rrcr sEceae
absut rhe sbovc dJbj€cr8'
Isu ate prcgarlag detal'l.ad r
back up t&e nmttly cbargca
asd 1111 {ore:d t&eaq to
&aor, tley 8& cfrleatllcg Yosr
wttt Fou and Llord摯 霊
by seXacaton nqber to
frcr scasdatd cegl
asg:r !c Poeeible. As Yc,'.r
tl.osg frs rdveacea for
rocetYad 8ny ds.Eallod aePort.
ltos ctace tlet have
!ibr. 8glre ls bsvLag ecralflcoclotg prepglen to c6'!eet tbe
tbcsc
ccrspptsge.
9よ EDフ /′
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KLEIN AUDIT CLAIM
1. I have revierred
cl-aims asserted by Klein.to
On
App
the
tr{ood:
Beatle Product:
capitol Position
Ie
S Claim
Basis
S13′ 73■ .0■
App■ e
S507527.■ 7
apple claims Canad.i
royalties should be
same U. S. pennies
U. S. sales .
S57′ 695。
47
S75′ 96■ .77
claims ■7-■ /22 o
244 Ampex
fee .
reel-to-ree
Apple claims l{exic
royalties should
same U, S. pennies
U. S. sales .
the
S
amendnent r,vhieh vras not
sicrned.
Appl-e clairns that \,7e
must pay royalty and
pressing fee on scrapped records since vre
have not certified
scrapping.
S395′ 837.■ 9
Apple claims
should recei
ey
oy―
alty and 1i se fees
on all promo onal records s i-nce
thei r
r.rords
it
"
ordinate 1y
S■ 89′
089.■ 9
Interest
7-3■ -70。
::Iannuccュ
s
gh"
Klein agreed oral1y (and I
confirmed by letter in
December, 1969) that Apple
r.ias to receive 1-3-3/4? aud
Capitol IO-I/42.
Klein agreed in his precontract agreement that all
other rates than the Str'tr prefix rvould be on the same
percentage basis as tlne 58f
vras on the SVI prefix.
Contract provides for _
percentage. The percentage
was to be included in the
Contract provides Capitol
will certify but Coes not
specify v,/hen. Capitol is preparing cert.ification nohr.
!iil-1 be ready soon.
Capitol contends they have
no clai.m based on their
"
opinion
".
ェ n―
ough
ple claims
Capibol contends no agree―
ment.
to
■nterest‖
DFC 10 1370
￨
],c(:t,::l●
し ヽ ￨`i:
28′
● n‐
EXHIBIT H
■ of ■ page
■970
ヽ
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Ca「 :k)l,Ч
MEMC)
「 ROII
OFFICL
BIiATLItS
-
CIIAUI\i t'tEr.to
Or
DECEIIDftR lB
,
f 9 70
App]e claims that we must pay royalty ancl pressit-lg f ees
on scxappcd records since wc have not certified scrapping.
conunent: There is a typo in Chaumrs memo. The amount
cl-ainicd is $71-5,96l-.77 not $75,96!,77.
As Chaum points out, tbe contract provides for
of scrappings. These are nor,r being
certificatiotl
detailed
plepare<1 . l'he contract is silent on the timlng for deJ.ivery of
iucir certificatiorrs anil I cannot think of any way APPfe j.s
1;rejucliced b)' a clelay in supplying them. I think this claim
is ivit.hout mel:it to the exteDt we are able to certify to such
4.
s
cral:ping
.
ceive royalty and license
in tl-reir words it t' s eems
claims they shoul
promotional
recor:ds s
fees on all
5.
AppJ-e
inordinatcly high".
Conmtent:
19
69 provicles
Sectiorr B.b.
o
the contract of September I,
:
to Distributor at
quantity of Apple I s
tribution free of
prices to dis c
record reviewers , the
1ar cus bomary recipients .
The amount of discount i respecL of such
promotional records shal be as set forth on
(b) Apple agrees to sel
clis count , an addition
records hereunder for di
char:ge or at special .low
jocl:eys, radio stations,
trade press and other s
"
a
Schedul-e "A".
SchecluLe "A" does not set for
'I understand from Burdick that it
Capitol. would bear the cost of su
get no spread, In any event the p
to be the arrrount of the discount b
involved. There is no legaI basis
some of the recoLds af fegecl to be
proriroLional . Burdick is having th
that we know the facts.
the amount of discount.
as to have been a wash. Thus
records ancl Apple vJould
t in issue does not appear
the quantity of records
or such a compJ.aint unl-ess
omotional were in fact not
quantities looked into so
Interest through July 31, 1970. Apple claims
"Iannucci agreed to interest. "
interest Capitol is
Coment: If you agreed
you
e
dic1, Apple is not
didnrt
and
no
one
el
bound, If
judgment
entitl.ed to interest in mY
6.
S OII「
じ
Pago -3-
EXHIBIT I
■ of ■ page
,
DArE
■0
December
30. 1970
?
・・
」
MEM
Ｍ κ
Ｆ
Ｆ
”Ｏ
orFICE__
SUBJECiT
:ヱ
窯
7“
CEMIFICAT10N OF SCRAPPING APPLE BEATLE An NON― BEATLE PRODUCT
This will confirm our telePhone conversation qf Monday' December 28'
Product designated as Beatle product and accoqnted for under the
api:fe feacle contract may be scrapped accordiqg to Capitolrs
nfi".f scrapping policies but Apple must be glven a certification
that the Beatle product has been scrapped.
ProducE tiesignated as Apple (Non-Beatle) prodqct and subject to
the terurs of the App1e (Non-Beatle) contract may not be serapped
ryichout an authori;ation in writing from an officer of Apple, or
in lieu of Lhat, upon written instructions from our Legal DePartmen!.
you are Lo obtain certificates of scrapping for all Beatle product
scrappeci since September 1, 1969 and see that cerEificates are
obcaine.l monthly for all Beatle Product scraPped in the future'
also to obtain certifications of scrapping for any Apple
Non-Beatle product chaE may have been accidenlall-y scrapped in the
past and for any that should accidentaLly be EcraPPed in the
iuture. It goes wiEhout saying that all reasonabLe precaugions
must be taken to prevenE any accidental scrapping of Apple NonBeatle product in the future.
You are
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EXHIBIT 」
■ of 3 pages
一
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一
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爾
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January 4, ■971
ure J.● .3mford
E M E ttttted
P. 0, 3ox■ .E.5.
bndont甘 .
D●ar
1
Bil■ 3
ta€otly teu toilard.d I ilghadub of rooc5rr
&r tra €epltol
" ●3 8ubltted by▲ llm
・
Co !K[r. lrrmnbl5r,
f,.l.ls to Lu food rnd
tb. rtrratl oa tbc
lr roprernccd rroy rad
Yerl.qrr frlluror oo tbc
ol Ceplcol co at!&r
Co fppb la rrilrtdquatr rod d.u1y
rrrdrr tbr tarstar
fictloa ct aur obrlgr
costrrct rad tbr aon-
grlrrd on thalr rcbodul
bgrl pcoplr for coqlr
Apgh coocnoB'
co our
ti.aroctrl
ead
I
to lour
ta ttrLr lrtc.rlhrt
oooslurl,oor
t
I nrnly Drrephila
rrtilct d lre tbo
Fendered. ●1● 1口置telソ・
llr. Irsnrleel r11l rerpondlla rbrtwar drtell rod
to 3.b. rlhltton,
*rtrvrr tora tr .prop
rftrr full cscrorcl brt
31re bln by lrgrl rad
fluactrl proph. bl
rrrl?oBr. 3o lgPlth,.
●1饉
11…
t● 1′
f―
taanusct.
"庄
lhlrr clr:hr rvrr
llrrt, tgr nat r.lllt.
lrvr bcco.rdr to Capftol lgplr. tart ld' th.
nr to tr.tfidc
drnml cbrctud bl Alln
●● L bod‐ ‐
:hlr rrary ef *rrr cry
cooglrtrly hrpproptt tt
留 嘩
Drrgltc tbl lrcE lr'rt cb.ra
=認
郷
970
I
EXHIBIT 」
2 of 3 pages
Mr. J, ●. Stanf
nade
of Cspltol, I
▲1len Kl● in to
atroag,ty rsquett
eek blo 8o do 30.
any clafuoa Eo
e.ra to Crpieol
be properly rcr
bandled by tbore
lle all bcre trc
lt vculd be ecllg
。 . Paε ●
trcac no lntention
lcrte
th€rE
of uklng
I elro
to s.
! ncltbar you nor lan lood
In 3LOrt, 1■ ■■■●● 40in ha8
of Ct,ltol, he
to All● n te■ ●
…
tht8?・ '
Sevaral of Cbe ltt
rarry gs lmpoarlblc
rerpoad to lnBg
ltrte a raarkctlog
tbcrea bc thon trno
the ●113hte3■ ■dea
cert● ■●ly ther● 13
clrar6e to ur of a
2 . . January 4, 1971
co口91● int3 8●
●Lould
c―
m■ ‐
that thtty can
to rnd crpcdttlouslt
le b03t qu■ 1■ ried tO do 30.
ln our convlatlon thrc
ly ■11,advi3ed fOr u3 aC" t0
uk r'tt'at do you eoac bY
tr and alrlor tn tha auoor ul to undorltand lnd to
tly.
tor rlrraPlcr Klcln
t'
●f 1361,353. ■n Paren‐
t.tr f,onc of u3 bavc
t he 13 t8■
a
1● r and
tFaCtual =in3
b● 313about
gurPose
for eoy
ctog
fio
re can rccognlle.
lmng Ehe 3l€ntfi'eEnt clr{qr ar€ trhote for
ecraiplog,. llnder tl.ls bcadtnd'r rc Eust dlffcrrnelai:c betracn tbe rcruppln6 of tcstlce tecordt
rnd tlre tcrrpPtsg of qon-lcetla/Applc lccords.
A6 Bo cha Eeilfei racords, Capttol har tbe rlSbt
to rcrep tuch rccordr rtebout uktag &lltn. Ery-
Gvsrr tLG bngrrage of, tbe esrttjst tt'tcl Sblt w
n$!t msartlf,ytt r11 acrrPPlcg. Sr€ Gootraet,
bc*ver, doat sot ry riran rrcb certlflcrtlon oo
rhould 6l asda. ft ll eo our dtreradtt tbrt
terlpplnti corttft€sttont brye war bcen t€ot to
iticir'Klilo rloce sho acr coatr.€t n tourdortrksn'
tcrrp'
procedod rtt'h orrr rtAbt
tci *r hele
gE
lfrli'
nyt.
LB
itrr te belna eor:ccttd
lcrtlftcatea-for prlor lcrepplng 9111 be sdrt to
Kfctn3 aacoadr lrr Ghc tutunr,rcnpplng ecrtlflcrta. tdll bt'lec oa r mathly brelr. Ia
EXHIBIT J
3 of 3 Pages
Hr. J. G. 8taniord . . Page 3 . . January 4' 1971
prlreiif}6, 1te sn.-- IJelu noth.lng for che cgrs:i?lrg
of feaife rocordE, provtdlng tre ser-rd ceti!.ftca';31
atEetEini to such ecrapplng. la hle lu{tllaryt
Itetn llite G charge of $715'0OO for Beatl'! tbc
rcrapglngl, llirac he lr dolng, hcre 1r reeklng
ttfuli- apieadt' of pca'nenc on thele records rg lf
not be€n octspPoC. lfe do oot aetuelly
koo; btt charalna borta, bur tte do kaora ihat
ghers rosld bc no cliar6ee due h txe onea ecrappinSl
Shey bsa
eerBlf,lcatce l€l''e been aupplled.
As t● 3● rapp■ n3non‐ 嘲 ヽO prod“ t,Capitol詭 s no
a`二Loritノ Vnder ttie n碁 4こ ontr.ct to 3Crap withOut
tll● o(ay of Apple`
H● 3卜 nOn‐ BCatle Apple prod“ Ct
:Ittr:tittl:1)i 1驚 ::3:l[tSt::tdI:tri:111::電 :li:i
Ehe eontratrJ'
levcl, deeplii epeelfic[tnetrueclona tocsStO諄
ar=
ate3orl_ tturnod fro、
pr● こ
uct ●I tni3 ●
dO● 3 [i faCt 3ot =CrIPpttF fr・ 7b ti■ lo to ti`CO do3Pite
LO■ ■tメ L6ido 3o・ A130, Kle■ o neveF
our ■ack oE 3■ ■
p031tiVely r● 3pOndB t0 9br reqTeSt f° r pem16SiOn
,Of● our60,
Lo scraP.‐ vA`LrlJinじ t143● ,tit0 188■ ●
sl6ned that
tc its very ic:t Liui Xr,itn l,as nover
E!ii: rlll:'! to-con-
cgrr:racE
[[工
■
xiein。
ri i.i'' in iaci g'{ves li!:'
133● 露 P,=●・
■
1守 foFO,ず つ
iEIittI
二
::itlid ilhi:G:。 ir.」 [tiど 33tit° IIri:.:3a:I
blI
thi3=fi:ェ
iよ
11選 illol:,::::::w::n
:奮
il ::1:』
t°
proaij"t-tl.ot ts rr,eie uni |rocii';t tlref l'46 been lold'
、
よ
Kleto rlao lbors n Prc/not
tgrc@enlr re have clc rl
pionctlo;ral PurPose€ tdth
or Ilcc$ae.
cbe
porltlon
trort€verr Kla
thlc ue lra
i rccorr! etarl.a of
ettter ro,3■ ty
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EXHIBIT K
■ of 4 pages
TO
OFFICF
MEMO
FROM
OFFiCE
SuBJECT:
Ao
a reeule of ou' ,"6glag to
rde@ sectlng fortb yo*rr oplolm
by Len floorl. Be alro ulced
slslraq ulth our
booLS
o I brw
r cach of tgu prepared r
tbc clalnr foryarded to qr
to trt ard recoocl.lc the
the three n-3
(Ctaro, T11ll.ng!ert, baacao)
fubjcct .rtEcr for catlcr
refereace, coplcr of rble& rre e
盟七
聖
観
ぶ為
:弓 1霞 」
FttlttL=夕
熱贈
Gortlkgv rod laocucct not to rrk,
or quefy lletn or Applc
about tbe clatnr
rt tblt t{8. tn
typtcally lleia-rtylc .d dll
cndlng ocgotletlor.
bG
Attachrd 1l -y optalo of e.cb ctrtr.
oploioo tbe c1alnc ere
by bIn
lo btr o.vrr-
EXHIBIT K
2 of 4 Pages
pじ 0し
■じ
SCRAPPED RECORDS
Applc_say■
:
0)
lll
Scrappr:rl Rcco;'cis
工 lJ!jJ2ヽL」 ヽ
111111-
′15,`〕 61・ 77
cal)i tCll lヽ
く
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I:￨::li:￨￨￨・
11
f
ChauIII says:
S75′
961.77
Apple c3.airns that \"/e
nus L pay royalty anrl
pressing fee on scrapped records since vre
have rroL certified
s
cr.rppi.rrg
Conti:act provides CapitoJ.
rvill- cer.Lify but
cloes noL
'Ca1:j.tol
specify rvhen.
paring cerLification
!1i11 be reacly soon.
5.s
nort,
pre-
.
Tillinghast says:
'
4.
Ap〕 Plo c3ail■ s tl】 at ヽ′e must pay I‐ oyalty and Pressing fees
,ccords since 、′o have not cert」 fica scrapPing。
o,n scrap)pcd 〕
Conヽ nOnt:
ThOre is a typo
nca is ,7]5′ 960,77 not S75′
c]_a」 〕
96■
」n Cllauini s rllelllo.
The ainount
.77.
llilcliii38ry of
!::ill:itili::￨:￨￨:::￨￨:isi:li:ll::i:lili::￨:i:送
neiせ
aモ
:1:『 ￨:::::[甘 :iel::hi:itlllli:1:iじ
r[ellll::1 1込 nfitd:き ),き
1、
scrap,p」 ng.
Accounting says:
D.
SCRAppED RECORDS
cannot deteriline the period of tine involvec'l itr the: Aop1e
scrappecl reco::iis. Since CRI will take ):;tck all CRDC
of
f igure
rei.,rns, our c1oscst cal-culations to the j'J. fig.re is as fol lorts:
I'Je
SEPTEMBER 1969 TIIROUGH SEPTJl卜 IBER
- Scrappefl
Reduces CRDC PaY6|lte
CRDC
CRI -
to
■970
APPIe
ScrapPerl
'P,educes CRT receivable frorn J\ppJ.e
AnnOunt due CItl
Sl′ 953′
219.42
Sl 237 2]8.00
iS i 716′ 001.42
DetFlin ecI C(:rtifiOatos WOu]d have tO be obtained frOm M l E Accotlnting.
EXHIBIT K
3 of 4 pages
RE BEATLES:
A.
Arnpex Tape :
The signed contract vras ap
ment signed by Capitol but
It will probably have to
future.
B.
arently amended by a letter agreenot signed or acknowledged by Apple.
re-negotiated at some point in the
Canadian Sales:
Klein apparentLy is cla
two things; I) that he expects
to get the same American cents for Canadian sales (58c on SW)
and 2) that he did not a ee to the ninimum/maximum mechanical
license fee for Canada.
Unfortunatel-y, 1) the
mention the minimum/
ed contract does not specifically
mechanical license fee for Canada;
s
preadrr for the U.S., but is noc
(It iS built into the
specifically mentioned
and 2) the signed contract states the
royalty in Canada will
percentage. The
a _(b1ank)
percentages were supp。 ed to be included in an appendix or
exhibit.
The pre-contract
pLus the acceptance b
thereon (907. of bare
the basis of our
pos
nt signed by Messrs. Gortikov and K1ein,
Apple of our U.S. price structure based
ord price) will apparently have to be
■on。
However, this wi 1 probably have to be re-negotiated at
some point, if
wish to get Apple rs signature on a
contract。
C.
Mexican Sales
(Same problem as
D。
ian
sales )
Scrapped Sales
Klein claims he should be paid fuLL royal-ties and license on
scrapped product as if it were sold since we had not provided
him with certificates of gcrapping as provided in the contrac E.
Accounting is now dolng this.
:
EXHIBIT K
4 of 4 pages
I am sure Klein wlll say there ls something wrong lrlth the
certLflcates ln his usuaL manner.
E.
Promotional Records
Klein claims he should be id fu1l royaltles and licenses On
4! promotional records, s e he cLaims that trthe quantity Of
records so distributed s
inordinateLy high.r' This is a
ridiculous claim. We may
e to shor"7 at some point in the
fucure, if he actually makes such a claim, that the promotional
merchandise on Beatles is no higher than on other product. Itm
sure he lrill then clairn it I too high on all product.
F. Interes t
y interest on moneys owed Apple.
He claims 工annucci agreed to
this.
Sal denies
Klein wlLL a tempt to get thls one way or
another in future nego tiations
RE NON― BEATLES
A.
Scrapping
Klein c lairns we have no authority to scrap Apple product. We
have undoubtedly scrapped some Ap e product, even though we
have instructed everyone not to do so. Accounting is attempting
to get certificates of scrapping
cover this. Klein clains he
should get full royalties and Lice es as if the scrapped product
were sold. tle will have to give
inventory cost, I assume.
You can be sure Klein will use this
future negotiations.
B。
Marketing Fee
We
C.
have no idea what
thls clairn is.
Deviations from Standard
Cos
ts
Apple disalLowed invoices for deviatl
since no detail of the charges were
was having dlfficulty in getting thls
from Etandard cost
hed them. Accountlng
formatLon from the
factories. They are now in the process f getting it.
should, of course, be furnished to Apple
It
／
／
た
た
¨
／
July 27, 1971
/′
CFiCE_
ExHIBIT L
■ Of 6 pages
W
岬
FROM___
OFFICE___
lbe Apple leatle coDtract rtates ttre folloriag:
Artlcle II.
12
rGapttol nay nrehouae rccordg repurchaaed by lc
ber€urder
.galost futur€ orde l8 or lt nay &etroy caee for rerap,
ar lt
aay detennt'ne. kovlded t&at bapltol ;dU provlde Eppi"-sitf.
e detalled Certtf tcate evldencing tr.rch deatructlon. ii'
-
Iletn
elaLas Ghc certlflcale antt be rlgned by the person
titneeslngn the' phyrleal deecsuctloo. -S1r r' of eoir-c. r- fe
aot poaelblc la to past pcrloda rlnce lt Er aot done end ia
Loprac
tlcal 8r Co t$e futurc.
I
have tgaln dtrcuceed Cbe Eatter vlrh l{f. tilllngbact and he
feele the ccrttficatl.oo of rcrapptot (8ta.ched) oeetr the requlrenenta ea Frded ln Che eoatract. Furtbernore, be raye he oade
a perronal lweettgatlon of tte rcrapptog proceaa st the DCs and
feels the elrrrant ccrtlfl.ctte lr tl,c only practlcrl wy.
In rly opinlon re blve no other ehotce r}.aa to aslotaio our
positlon thst tbe preseat ecrtlfi.crc. doea eet rbe requir--cots
of tbe contract.
Klein feels tbat the Beatle royalty ret€ i,s too lqr. f,e uees
every srgteent he caa to lacreage tbe cffccttve roya lty rate by
clainlng royaltles are due on aieslng Lu,neatory, &esi
prfiotr.oosl coplea gtven free, etc.
lte IcerBlficaEl.od gLatek 1r Jurt oe of thece devicee bc ures
to rchievc hlr srd Lo f,utuc oegotletl,ms.
_
■■ユ
´
MEM
/1
EXHIBIT L
2 of 6 pages
CERTIFICAT10‖ OF SCRAPPI‖ 6
BEATLE RECORDS AND ALBU‖ S
(
that the ordinary business
, I nc. re vEat-ttra-tii:￨:￨ f ieci in the a ttached exhi bi ts
°
RecorCs
11[￡ 薔ギ:di:t
has been scrapped Curi ng
the peri od i ndi cated.
ｒヽ
/クテ
:/′
´
Edr.lard C. Khoury
Vi ce President & Control I er
Cap i
Peri od Covereci
Apri I
,
1971
:
tol Records, Inc.
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EXHIBIT L
腱・_
EXHIBIT L
5 of 6 pages
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EXHIBIT L
6 of 6 pages
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EXHIBIT M
■ Of 3 pages
MEMO
鯖
=
: ratth.s to bnva I
roor l8 trngrlbla. Ec rsks tb.t
tor purpooar of enlng rp rltl
::置
L電 露
=』=計
ng・
r raro er
glrc lt c:raful ttudy
conccratag tht
mSpOn3e tO App■ e・ 3 COnte3Cted tO be batt ln th●
…
Lc■ orum
L:12i1971
●
´
―
=
Apple
●
EXHIBIT M
2 of 3 pages
〓
SCHEDULE OF
●
一
Ａ Ｂ ・ Ｃ
Per capito■
Canadian sales 3/31/7ユ
S180■ ′
:■ 5
Mexican Sa■ es ■2/3■ /70
■25,4
.97
Ampex Tape 6/30/70
■■8`
D) Sc4ipped Records 9/3O/7O
E)
Promotional Records 9/3O/7O
F) ェnterest (thru 7/3■ /70)
C)
9.80
740,095.0■
44′
944.8■
■05,■ ■8.79
Ba■ ance
S
6■
Due
,■ 03.■ 4
80′
508.■ 6
13,731.0■
7■ 5′ 96■
.77
395,837.■ 9
■89,089。 ■9
Advertising (Beat■ e Trade
Ads)
)摯 n
づ
RECORDS INC.
ES DUE FROM CAPITOL
TLES PRODUCT
Lennon,/Plastic ono
Band Credit
24′
050.58
60■ ,960.91)
ヾ 978」 ,20.■ 3
App
caPitol'
Emounted to $105,118.79 for
June 3O, 1970' This comPuta
roya1ty. The correci rate s
list price indicated in the
C) Ampex
Rovalties --
EXH■ BIT
M
3 0f 3 pageS
●
computation of AmPex royalties
e period 9/L/69 through
ion was based on an incorrect
ould be I7t4/" of loj% of retail
-SeJ-I agreement,
Article II,
Section 13.
tage eguals $118,849.80,
Our figure using the above
leaving a balance due Apple
have not receiveil subsequ
ords of ,■ 3,73■ .0■ .
We
ccounting.
indicates
D) Scrapped Sal-es -- Capitol's monthly reporting received
considerable scrappj-ngs. Hovtever, we have not
detailed cerpificltes evidencing such destruction as
trovided for in Article 1I, section 12 of the Buy-se11
E) Promotional sal-es --
●
.
Art le III, SectiOn 8B Of the
' Buy-Se11 Agreement Provid
' utors, at a discount, rec
or at special l- ow Prices
record reviervers, the tra
recipients. The quantity
inordinatelY high, theref
.
these records
F)
for Apple to Sell to diStrib―
ds for distribution free of cha:-ge
o .disc jockies, radio stations,
e press and other similar customer
of records distributed seems
re, we are billing caPitol for
.
versations were held bY Messrs.
Intercst (thru ?/3I/7O)
that Capitol
Klein and lanucci, at wh ch time it vras 'agreedbalances
due'
would pay to APPIe inter t on the outstanding
AccordinglY, a schedule as prepared vrherebY interest has
been accruecl at: a rate
outstanding balance at
retail sales Price
3/3■
on a
5%
per
annum based uPon the
e end of each month-'
-- Capitol has increased their
f $a.ge albums bY $1.00- This
adjustme:rt should be r Iected on the PhYsical inventorY
ent sales. However, We feel that
aL 3/3L/7I and on subs
s shculd be biJ-ied ac che $4) 96
returns on all $4. 98 a
price and not the incr ased price.
REC・ ￨_1/10‐
ill
― S715 961.77
(Page 3)―
29-71/1:1
人′
EXHIBIT N
■ of 2 pages
(a) Tl^re charge made ($715,96L.77) is for all Beatles records
reported as scrapped at the trprofitrr Apple would have nade if each
of them had been sold.
is said to be I'same as non-BeaElei'i, save
thac Apple is not entitled to the vinyl scr:aP sinee Capitol absorbs
che manufacturing cosE, but Apple would be ent:'-tled to any resale
in the secondary nrarke! on so ie sort of a formula basis.tl
(b)
App1.e's posiElon
It should be recognized that st.atement is much too broad.
(1) Beatles records are the property of CRI and it has no
legal obligation !o hold on to any guantity if in CRIrs judgment
they are surplus in the market place.
(2) Since they are CRIts property there obviously is
no obligation to account for the scrap value.
(3) Although Applers position speaks as if Apple had scme
rr'.ght to require CRI to seek vrhat Apple t s representatives call- a
I'secondary rnarkeLl Seider at the meeting sEated tliere is a ga-, iir
Ehe contr.i.rc, Actuai-ly in'ha t he shoul-d have said is ti',at CRT is in
control of marketing and has no obligation to dispose of Eeatl-e
records at disEress prices.
(c) Applers positioir rr'ou1-d, cf coi:rse, incl''-ide the cont:ntion
that ir CI{I cannot reasonably establish that particular recorcis
we::e actually scrapped (destroyed as records?) ti-ren CRI must pay
Apple as if CR,l- had sold these records.
(d) Klein does not consider the certificates furnisheci b1as
co::1p.ileni eviclence that the records :lnvo1ved l.:ere aci'"laii]'
Cll.I
scrapped.
Note: Paragraphs (e), (f) & (g) following are same as
vre said re non-Beatles Apple on pages 2-3 supra.
(e) As in the case of non-Beatles, Klein vascillates about
how the actuai scrapping c oull-be proved.
(1)
talks as if the presence of Apglers
representarive as each record is destroyed is essentiaL.
Sometimes he
(2) other times he recognizes that isnrt feasible but
(
sounded like he r,ran ted the opportunity to have someone there if he
chose although recognizing such representatives would not be present.
S
upra
' ':
a
\
EXHIBIT
i
(f)
He
N
2 of 2 pages
REC: i1l10-29-7L/L:.1
said several tin,es thaL the quantities
desi-gnated
t'scraptt are very large and lie expressei concerl.. chey r^'ere going
out the back door of DCts before actually scrapped.
REC asl<ed if Klej.n had anytfring to sr:,bs tant
cern in that regard, Noching rvas fortircoming.
i...
Ee
his con-
(g) There are tr"-o ideas in here r.dr ir:h find no s,ipporr in
either agreemen t
(1) Klein suggests that the present marketing set up is
too resErictive and results in scrap of unnecessary qllantiEies:
Apple presses 100.000 recr-rrds and exhorts C-dI to put
them in the stores. CRI is unable to get thern
Itexposedrt. Appl-e ts product never Bets inEo channel-s
of trade and unnecessary que.ntities are therefore
scrapped.
(
But if Klein coul-d jump in and help with the sales
efforc larger quanti-ties wou1d be exposed. E.E. a
telephone call- to Handler,ran might get trin to buy
and expose notrii ths tand ing he curned dorvn ti--e recoril
to CRIrs represenLalives.
s very careful not to introduce Ehe
of uncollec Eibi li ty of sales of such
product. Applets representati\:e r'rouid Co j,i "for
Capitolrs accountrr and presumabiy only to people
Klein
rr'a
element
CRI f ounci credit-vorthy.
(2) Klein also suggests that before Beatle records
are designated scr;rp and destroyed Apple should be given the
privrlege of disposi.ng of th.errr in the 'rsr:coricigry na::l<etr'. F.EC
pointed out CRI is the exclusive distributor and thj-s therefore
introduces a whole new element for negotiation.
Note:
.
(
him of discussions re
disposition and the demand for fu11
publ-ishers fees, eEc., that woul<i give
Apple a profit and CRI nothing,
Chaum reminded
EXHIBIT O
■ of ■ page
V
TO___
f‐ 日C[_
Capitol.
MEMO
IC3"t口 h`=“ ￨=:￨● 口
,lll
kJ__
OFFICE_
ALLEN XLE工N
■.
On December
■5′ ■97■
(ati2100 in the morning)during
our Bangla Desh negotiations
London′ Klein had a handwritten
note vhich nas prepaled Lntt
lt to on6 of the proposed er.hib Ist百 毬
:::露 呈
rD:ξ h電 :itting
ment relating to shririkage of t
Bangla Desh Laventory.r The
side letter relating to eh
reference to ahrinkage included ざ露
(翼 島
量
:il覇
2. DurJ.ng the couree of
Degotiatl.ons, KleiD Per-=.
nlttedl Ee to aee his notes and I copied the following inforna-
11)臨
a.
There are four Ltens
finally reaolved.
(I)
tiXlein desireg to have
are8
lems to be nutually resolved
ratl.onal probleros " in the
lttre expression
past lras apparentl meant to Klein ttre day to
A11 operatlonal
tory, proDotion and ad-
day marketing,
t
vertiaing
problerns
(2) Finallzation of the Apple Callf ornla,/Capitol
;non-Beatle rlpple product.
contract relatlng
(3)
An lncrease ln ttre
effeCtive Sep
ノ
product royalty of,
(4)
b.
PayDent
by Capitol
taken La t}e
o
yt,t'tr;,,, i
レ
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ロ
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tlon:
unauthorlzed deduction3
tings.
In return for a Eutual resolution of tlre four out3● raP′
＜
l2l raive Applare clalla
(3) Yaive Apple ! a claln
({) raive Apple'g claln
ahr!.nkage ;
(5) ral,ve
lnterertr
Applere clalm
a narkeUlng feet
excesa prorotlonal records
t
and
く
SICNED:
●●● 1● ￨ILI REV :● t,′
'0
“
FEB 4
197ど
EXHIBIT P
■ of ■O pages
ヽ
iapito:Rec`rds.:nc.
一/
3'O Avcnue or the Amerlcas
、
●■ YJk.,"w York 10019
■1● phone 1212'757,470
／ ヽ
in Crtilol lndlltrilt C!!lf rnt
c/o
ABI(CO
Industries, Inc.
1700 Broadway
New York, New
York
10019
、、
︲、 ︲
、、、
︲ 、
、 ︲ ．
、、
、、
︲︲、
、， ︱、︱ ヽ
Apple Records, Inc.
Gentlemen:
February 3,
■973
\
March 22nd and 23rcl of 197i, representatl.ves of Apple Records,
Inc., a Nerg York Corporation (r'Appler') net with representarives of
Capitcl Records, Inc. ("Capitol'!) and arrived e,t the oral agreements
described in this letter.
On
1. The written contract betlreeri Apple and Capitol of September 1,
did not specifically provide that the mechanical license fees for
Apple albuns sold in Canada nould be no more and no less than 24 cents.
elpfe ana Capitol- oraL1y agreecl to thait provisicn and that Capitol owed
Apple $9,679.84 for deficiencies in copyright pa)ments from Septernber 1,
1969 through Decenber 3L, L971.
\
1969
\
Implementing that agreement, Calitol paid that arnount to Apple
by including lt in a check for 936,218.85 sent to EIII, l'!ay f8, L972.
I
the
subsequenL pa)nents have been
aforesald oral agreemcnt.
2.
The Capitol- Record Club had
#d"
Uy
sold,\in
Capitol in accordance viih
Ganada and
the United
States, some Apple recordings notniths
contract of Septeriber l, 1969 and Apple
would be entitled to be
of the vholesale price prevailing
.\
in the United Kingdon.'
Said royalty amounLed to $3,243.05 d3rrough August 31, 1971,
paid to Apple by credit rnemo #98 datefl llay 31, 1972 as shor','n
on tlre May 3L, 1972 statement transmitted to E)II (with copy to Apple).
and
r,ras.
1
Said royalty fron Septembe'r L, L97L tLrough Decembcr 3L, L97L
.
for the United States and Ca)radian Record Club'pales aricunts to $L1943.87
and that sum is included in tlre check enclosed \erervith.
\
3, Capitol aud Apple agreed that in corr,put[rrg U.S. dollars payable
to Apple in connection rrith Apple recordings rnanqfactured and sold in
Canada, thc conve::sion rate fr.rrn Cairadian to U.S.\ dollars rvould be the
opening rate of exchar"rge quotcd by tlre Bank of Arn\i:ica hrtcrnaLional i-n
Los Augeles on the'day of palr:rent by Capitol to Aflple rather than thc like
\l
'\
-1‐
EXHIBIT P
2 of ■0 pageS
3.
Continued
by Capitol's Canadian licensee to
p
The amount due APple as a resulE of that agreerDent througt
t amount is included in the
Decenber 3L, L972 is $23,103.69'and
is enclosed indicating the basis
enclosed check. A detatled analys
for this adjustment.
rate prevalllng on the day.of
Capitol.
The conversion
will be used by Capitol
rate as so
tember l, 1969。
for the duratLon of out contract of
4, As of January L, L972, Capi 1 is not responsible to Apple fo!
sales of App1e recordings in llexico. Prior to that date, Capitol was so
responsible and was required to repo
quarterly basis even though Capitol
Mexican Licensee. The significance o
not knorv the rate of llexicin tax until
As a result the tax had to be esrinat
flgures through D€c ember 31, 1971 are
$9,599.29 as an over deduction by Capi
amount is included in the encLosed
Mexican sales to Apple on a
not then been pald'by Capitolrs
this fact is that Capitol would
the pa)rment was actually made.
and corrected 1ater. A11 of the
knor"n and Capitol orves Apple
l from Apple royaltie,. That
´
一
一
一
一
一
tO t71thh01ding by the }lexican
A notarized certlficate attes
goverrment, and the amount thereof, wi respect to sums payable to Apple
December 3L, L97L is attached.
for the period from September L, L969
certifieates
by
the Mexican government si,nce
is
Ihere are no equivalent
government
include, without breakthose certificates issued by the Mexican
pressing
fees.
out, other artist royalties and Capitoll
5, Capitol
for
itol
had accounted to Apple
ed and sold by Arnp ex.
and Apple agreed that
correctly for all Apple records
manufac
to1 was entitled to a credit
6. Capitol and Apple agreed that
mLsccllaneous charges of ,1,928。 20 and that anount has been deducted
from the enc1osed check.
Transmission by Apple to nfi of
enclosed Capitol check No. 10644 in the
Apple (or r:etention of the funds by Apple)
of the oral agrecnents described.
Very
t
funds represented by the
$32,718.65 for the account of
11 conf i.rm Applers acceptance
of
yours,
EXHIBIT
P
3 of 10 pages
(
Recor! club igltltt to L2l3l7L)
a;;;il." conversion Rate to 12131
Me:<ican
Royalties,
Cash
l{ithheld
.$ 1,943.87
Itl6g
23,LO3.69
9.599.29
$34,646.85
to
31/71)
Less lliscellaneous Charges Oved by
$ r.928.20
to CaPitol
Balance ?aid lterelrith
in lheck
#1
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︱
、
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、
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、
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、
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-3-
EXHIBIT P
4 of ■O pages
ヽ
DATE
Feb
W
TC______‐
,F′
CapFtole
‐
、CE
MEMO
AC:IIt“
い
3=Com14
`I`●
FROM___
□ CI
OFFICE
[]CRI
Baot 5
The attached schedul-es reconcile the figures reached in the
settlement proposed at the Apple meetings in New York in
March of L972 and sent to Apple attached to my letter to
Joel Silver of May 2, L972 with subsequent pa),'ments and accruals
to and including the two checks dated February 3, 1973 accompanying
the February 3, 1973 letters to Apple (one Beatle, one non-Beatle)
over TilLinghastts signature.
Note: I understand these two letters were retyped in
on 2-5-73 over Mr. Menonts signature.
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・
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EXHIBIT P
6 of ■O pages
:NDUSTR!匡 S,:NC.
画
1700 BROADWAY,NEW YORK,NY loo,9′ TEL(212)582‐ 5533
Ｓ
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EXHIBIT P
7 of ■o pages
NコV YORK
T10N OF
Amount Dre Per
caPitol Per Letter of
Feb
ry 3,
32,7■ 8.65
■973
Amount D.re Per APPLe
． ２ ８
９
。
・ ６ ５
Mexican Rovalties
(See Schedule rr).
.
Artist Royalty Escalation
s/L/72 - 1z/21/zz (see schedule rrr)
Balance Due AppLe
Reconc
４ ８
８ ０
７
６
８
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︶卜 Ｌ
。 ︲
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Copyright Royalty 5TA0-3363
Canadian (See Schedule I)
278′
786.63
246′
067.98
1
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32,7■ 8.65
il iation
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Lapil:,t i'iecords, lnc.
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ond 6c:rerel Oflices
ceiirotro*",
itollywood, Calif otn:a 90028
-Teleohone 1213, 4G2-6252
11｀
Cap:d.
112,it,1い
es Compaly
=1“
“
February
27th
■ 973
Apple Records ' In c.
A New York CorPoration
1700 BroadwaY
Ner^, York
r
New
York
10
Genilemen:
APple Records ' Inc . a New York corPoration ("Apple‖
Records' Inc. ( Capitol" ) are Parties to a
Capitof
and
presses
contract dated September 1, 969 under vrhich Ca-PitoI
McCartney′
PauJand distri-butes records reco ded by John Lennon,
j
as
George Harrison and Ringo St r ("Artists" ), oin tly
"The BeatLes" and as individ ls, (the "Contract" ) .
Certain disPutes ha ar■ sen betrveen CaPitol and App1e
a copy of which is
■973′
and by letter d-ated Februarl'
attached hereto, CaPitol tende ed to Apple a check in the sum
)
4-,1
//"
.
,"n
I
-.1,
"
):
of $32,7f8.65 in setllement of those disputes.
Capitol and APPIe trave agreed that Capitof is indcbtecl
′867.84 and App■ e hereby
to Apple in the further sum of
said amount.
of
a
check
acknowledges receipt
the disputes betlveen the
In comPlete s e ttlemen t
agree:
hereby
Apple
parties , capitol and
1973 to APPIe
1. CaPitol's letter f February 3' sets
forth
correctfy
on
Records' Inc. ' a Nel'I York corpora
agreements of the Parties.
2. APPIe acknowl-edges that John Lennon is an
the contract
exclusive recording artistgl"!Ifor EI'1I mited under
1967 .
26
January
Linited f
between the Artists and
'
made
heretofore
cor<1ings
Apple further acknowledges that aIJoffered
are recordings
embodying a perforrnance of John Lenn
to Capitol- under the Contract and tha aIl recordings hereafter
nade, through January 27, 1976 embody g a performance of
John Lennon will be offered to Capito under the Contract.
―■―
EXHIBIT P
9 0f ■O pages
es to pay Apple the Prices
the Contract v,'ith resPect to
sts released after February
to the Contract
28, 1973. The Prj-ces sPecifi d in Schedu
shall continue to aPPIY to al recordiugs of the Artists
the first two releases
released Prior to March 1, 19 3 and to
(two
albums of two I,P discs
ngs
of "Best of" tYPe Beatle re
ngs ).. App1e \tai.ves anY claim to
each of such re-rel-eased reco
ts arising with resPect to
any additional- Schedule "8"
Section 8. of the Contract.
4. By letters da d September 2, 197! and
d that there had been a
Septenber 1, ■972r Capito■ cl
ng of paragraPh 5.f. of Article
de livery def aul-t w:thin the me
waives Sa■ d de■ ivery defau■ t
Contract. CapitoJ. he
→
respect thereto.
省Ad ilih:f Capitolrs rights wi
5. Capitol has heretofore suPplied Appte with.
the scraPping of Apple records which
evidenling
certificates
piior
place
to November 30, 1971' Apple hereby
scrappinq took
waives any craim it might have that
and
;";t
;;;;;[;
""ititi-.'.tes
did not in fact take place' No scrapping of.
"".fr'..."pping
appi"-t..bids took place after Novehber 30'.1971 and no such
3. Capito■ agr
‖
speo■ fied in SChedu■ e B‖ to
a1I new recordings of the
stiapping Wi■ ■ OCcul witllout Appleis consent.
6. CaPitol has he
promotional- records and APPIe h
involved. Appte herebY waives
quantities were excessive or unre
ofore accounted to APPIe for
the quantities
guestioneil
-c1aim it might
have that such
sonable.
cordin e s we.re sub j e c'u
Ji*iri Ji"tr," -i"" i_ti"" li,a\u such 16 arising
EIii i"i"n
-c""tract
with- respect
and ha^d paid all rpyalties
i.'tfr.
that
ackno\^tledge
thereto to EI'II . Apple aird Apple caf if ornia
hereby.amend
does
position-i" cort..i. Horfever, ApPl-e
;;;;d;i's
payment of
of August f1' 197q vrith respect-to
ti"ttions
it! i""
in
listed
monies to EMr to provide that on single records
undcr
the
payable
the fnonies
Exhibit "e" heretb one half of
sold'
record
each
for
iuplu^U"t 1, 1969 agreement plus twb.-cents
sum
paid to apire i-n ltew vork,iNew York and the
;;;ii;"
sha11
soe ci fied' beside elth alfum title listed in Exhibit "A"
EI'{r
paid
to
ti,u mo'ev which wo$rd have been
;5-;;;;;t.a-ii"^
to Apple dalifornia in New Yolk'
iirit"a ancl shal-l be paid
Capitol shalI pal'
h-eleby !agree
epple
an'd
Capitol
5ii^,-.i"it.
-withthat
the execution of this
fu
ll"appf" C"li'fornia contLinporaneoui
paid to -EIqr Limited
the sum of $?7 ,5i2 - 86 as nl2nies
amended
"qr;';;,""t
rvoufa have been paid to Apple palifornia had Apple
wf,i"fr
payments
for such
i""tt"ctions of Airgust 11,- 197Ol in tirne
future payments bY
from
recor'{red
"iiJ
be
Said
sum
siall
lo-U" ^ua".
Capitol to EMI Limited.
I
-.-l
I
I
I
I
I
t
Iil"i?'Tonn"n"=
8. Except for the fact that Capitol has accounted
through December.31,
to Appte for record club royalties only
with respect to.
audit
of
right
197i--ind subject to Apple's
its accountings
un<ter1yin9
C"pit"i; s ari. thnreti cai' computafions
bet\'ieen
accounts
all
that
agree
and Capitol
to'App1e' Apple
-lt
Capitolr s
f
pecemUei
ina1.
and
settfed
are
, tgli
[f,"*' if.rr6"qi-t-i
bv
this
amended
be
deemed
ieu.u-ry 3, 1973 shal-I
i;ai.;
aqreement and Apple shall be entitlecl to negotiate the -check
lEi."ii.,i-ti,;;"i'"'and pursuant to said lettei as amended by this
agle emen t.
Please acknowledge Applh.'s agl:eement to the foregoing
by signing this fetter agieement\.bnd returning two signed
copies to CaPitol.
very truly yours′
ヽCAPITOL
RECORDS′ INC.
BY3
TITLE:
AGREED:
AGREED:
APPLE RECORDS′ INC.
A NEW YORK CORPORAT10N
APPLE RECORDS′ INC.
A CALIFORNIA CORPORAT■
BV:
BY:
TITLE:
TITLE:
r concur with the Provisions
of seCtiOn 2. Of the above letter.
BY:
」oHN
ON
LENNOINl
cHT:bb
-3-
EXHIBIT
l of 5
Reccrds, I!c.
(A New
EFISIERED
0ま CorpOration)
Q
pages
POST
Capitol Records, Inc.,
P.O" Box 2J)1,
Eollywood,
Car iforaia, !0028,
II.S.A.
Jaa,aary 1)16.
Atiention the Sec:'etarl
Dea,r Sirs ,
You vil-I be aware that
e=.si.nation anil audit of Caliiol-rs books
arral:recolds has been Dad.e Dur3uelt
lrticle V.4 of the l€reenent datecl 1st
Septeaber'1!5! bei:reen Apple Recotds Inc., ("Apple"), Capiioi Reco=ris, Inc.,
buii.rlg Co;poratio! ( t'Dist:ci-butorr' )
(・ Capito■ ")ana Capito■ Re● ortt Dis
3eatle
regariing
record.ilp by I'ies . P=ager & Fenton, certified public
accolnta^ats, who have Dow conpleted.
report.
A copy
this ietter.
of their
Repor! da d. Jlst 0ctober 1975
is
euclosed
uith
You vil1 note that there
a number of natters refe:red to in
Messrs. Prager & F::riours le1lort as
t breaches or violations of the
!,greeneni; and. ve therefore give tou lo'ipce il this letter of the breaches Or
violations of tbe lgzeenent re fer:e i. to\ j-n the report and. request you to
renedy aLL such b!€aches lrilhi n f
Cays of the <Iate of th-is Lette!.
aotify you tbat for
accountings lendered
lJe a-lso
to statenenis
aJ1d
Datters outlined ia the eaclosed, report.
We also hereby notify you for
notices plovided by the AgfeereDt to be s
Corps linited at 2! St. Jamests Sireet,
of frr" N"S. Aspi:raJ.l vith a coplr to 3.V.
Greenberg, 9777
u"s"!"
!:lsbire
3ouleva.rd., Suite
The report of Messrs. ?ra4er &
vhich vere requested by essrs. Pra5er &
been supplied. lrle bereby fo:nal-1y request
of for:rteen days.
of .A.rticLe Y.4. ve object
the .A€reeoent by reasoa of the
put?oses
prrposes of .A.rticLe V. ,. that all
d on Apple should be sent to l!o1e
, S"V"1" narked for the attertj.cn
,
Esq.
I c/o
Schwa:ct.n"r' a:rd
018, 3everly Eil1s, Cal.iforr.i,'a, JC2i2,
ton r€fers to a nunber of e4rlanatio;is
ton on our behaLf and have stil-L uot
explalations '*ithi:e the said perioo
The very consiclerable sutr of IISS tl,2o6,112.18 is shovn to be clue to
,nt iコ コediate■ y
the undersigne d a.nd ve hereby forcally
t paynent of this ・
rhile reserving our rights iu respect of aly
surtrs subsequeatly showa to
be due anti i.oterest thereon.
YrO■
Tou will appreciate that llessrs.
& Fentonr s audit report is
i:r respect of the leriod gnding Jlst }eceaber 1971" We vouLd l-ike to loale it
clear that our lights i.D lespect of the perio thereai-ter are expres s]y
reserved..
Pn-q.can
r
ヽ
ExHIBIT Q
2 of 5 pages
Fus:cos
CERlIIiIED PU!
ACCOじ
2Wヽ oltス・ LOS
=LES・ LOヽ Doヽ
ヽ ■ ヽヽ Ts
636● SVヽ SETつ 0じ LtVA RD
LOS Aヽ 02● ES Cヽ LIroRヽ
ェA●
0026
0ctcbOr 31, 1975
The
0irectors of Agple Corps Ltd.
54
St.
Gen
t I enen;
Jamesrs Street
London S'.1l.{ l JT, England
Pursuant to our engagement, we
ve
h
exarn ined
the books and records
Of
CAPITOL IRこ C OROS
lilc.
s Capitol)
(hereaFter refOrred t。
for
`
oi ceternining ereas oi u rrePor t i no,
e;(tent trith respeci tc Eccouniings lend red to
purpcses
APPLe RECClrs
(he
for the sranufaciure
(dcmes t
,
tlic
.
(A r.li'.,
Y
te
and
distribution
ic) oi- reccrd i nos d.:r ive <i f ron
in
ras
f any, and their
K CCRPCRAT:0,1)・
r referred to s
r:.: f
i
App
e
Un
ie)
i
ied
S t.1
tes of
A,re
r ico
rs of
::THE DEATLESl:
Tlris repor t is, in all respects, idenlical to the one dated June
16, 1975 except that, in eccorciance with ir,!tructions conta ined in
ktters frcn 3erry Eo Nichois」 atcd July 31:1975,August 20,1975,
a nd
cctober gr lg75, ire have revised ihe distriu\rtion oi adjustments .1nd
I
rude the necessary chanccs in thc text and s{hedures of the report to
acccrmocia
te these insiruciicns.
I
I
EXHIBIT
Q
3 of 5 pages
０︵
monthly €ccouniings rece ived by Apple
expor
t
sa les
. ln
ievr i ng
rev
the
eflected dis tr ibut ion categorized
as
docume tation furnished fOr these sa:es, it was
disclosed that proCuct was sold to
ffi I iates in var ious parts of the wortd,
and to dcnestica I ly based export ccmpani
which special ize in vrorldrvide distribution. lt yrould appcar thai these sales onstl tute violations of the Agreem3nt and
that assertions of <,lana ges m:y be warran d.
It is Capitolrs pcsition, with reg3r to sales rade to dcrnestic exporters
tha t, in ordor to
●void
violations of anti
such custcmers. l.le vrere unable
to exporters, nor are
EHI
we
able to
t laws, i t vras requ i red to serv ice
the f inal destination of sales rnade
trus
to oscerta i
val
evalua te
idity of the anti-trust
l./ith respecr to shipments to Elll affil i{tes, Cepitol contends
rights to the proCuct, that
Beatle product is cons icierebly less than the
the worldrvide
口｀
′
the refore, there has been, if anything′
knorlledge
roya I
ty
ra
tha
No edjustr::ent
t
for
EH
I
ynen
t.
I
t Elll
had
rate in the case of
buy-se I I pr
l./e do
ice, ond
tha
t,
not have any
as ertions with respect tO the E:1:
had the wor I drv ide r i
such unau..horized sales
.
royal t)-
ntrectua
an ove
as to the cor;-cctness of Capitolts
tes, or
EJ'.ll
tha
excuse.
ts to the
incl uded
produc
t.
in this report.
Scrooc i nq
A review of tha monthly unit nnovenent reports disc!osed that unusu€l ly large
quantities of prociuct were being scrapped. Article ll, secti on l2 of ihe AgrEenEnt
specifies that Capi iol will provide Apple with a cetailed certificate evicencing
the destruction of product. Although capiiol failed to docunent that Apple was
furnished with certificaiions of scrapping, our tes ts indicated that authorizations
signed by capitol personnel e:<is ted
howcver,
fcr the quantities reported €s scrap. ve
feel that th-' scrspped quontiiies, which have a value to Appre of
-18-
do,
EXHIBIT O
4 of 5 pages
(^
ive in vierv of the stature of the
Artists invol ved and cons idering the fact that, to the best of our kno.,rledge,
none of the records have been celeted frcrn the catalog. llany insiances r,rere
$3r83 11595.63 (See
observed
E.xhibit,,F,,), are
excess
of nraterial quantities of a particular record being
scrapped and produced
in the same monih (see Exhibit 'rG"). This r,uy not be an unusua I occurrencc r.rith
respect tc singles, since neny ccmpanies hava found. it to be less costly to scrap
returns €nd re-p?ess ior orders. Ho*ever, it is
and
tapes. cepiiol
has not responcied
I vrith respect to a lbunrs
io our requests for explenstions for these
unusua
occurrenceS.
ntin
Capitol advised us ihat the accou
proCuct rvsre not transni tted
with
3s
the
l
rather were fOrwarded in separate accounti
(
receive this inccme which amou′ lts to Sl18′ 5
rendered
. ln the event that Apple did not
ll, an adjustnent would be r.rarrant:d
amoun
t receivet.
the payment
royalties.
This
where income andlor aCjus tnents f or such sales
regula
r
dcrnes
t
oi
the Sll+8r5e0.13.
ion did not include
activity in Canada or 卜
lex ico. Ho●ever, cё rta:n sed ions
CanaCian
Atteched as
L C0yt1: TS
It has previously been noied thai our exani
justnents in the case of
Beatle
mcnihly accountings to Apple, but
for the difference between this €nount and th
Exhibit rrHrr is a letter frcm Elil which deals Wi
GEiiERA
for sales by Ampex of
r.re
of
th
review of
a
is report
ccn t€
uld only periain tc
re i\c luded by Capitcl
i ns
in
in ad-
tances
the
ic Eccountings.
During the ccurse of this exanination, we were
una
to
as
c3r ta in
$hat
exam-
lnations, if any, heve been conducted by Capitol oi its censees.- The da ia m3de
available did not reflect any edditional i nccne distribute as a resul t of any
-t9-
EXHIBIT Q
5 of 5 pages
C
鋼調Ⅷ
Ｈ一．
０いＯ＾Ｎ∞一
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いい．０∞Ｈ＾〇いＮ
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いいＨ．卜いい．Ｈ一
︲
■
・
倒
樹
酬
﹁
司
倒
劇
劇
司
刻
．
﹃
ヨ
１
卜０．
∞ぃ一、い一
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い ・ い、い
製
０
耐
へ〇・いヽＮヽ
ト
〇一．０００、い
ヽ一・卜い〇、
∞ト
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い ・∞ 、Ｏい
０
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一
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００
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ヽ■ 〓〓∞ヽ︹¨０
︵
いヽ 、∞一
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い卜・︹いい、い
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ヽ ︰ ｏぃＬｏこ一 “ｏｏＬＬｏυＣ一
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一ｏ“一Ｃ●Ｏ Ｌｏ﹂ ︱ 一ＣＯＥ“いコ﹁つく ｏ″●∝ Ｘ●α〓く
い︹やヽ ︲ ヽ貿 〓く ︲ 一ｃ●´
Ｅ い３﹁つく υυ一Ｌ﹂
い。一ｏ∽ 一コ一り つＬｏｏｏこ ︱ 嗜０ “っ ●ｏ∽］ り０一Ｌヽ
一
一
。。一Ｌ﹂ 一一ｏ∽︱卜●一 ツ０ いｏ一●∽ “〓 〇 Ｌｏｏυ“
一 ﹁
ぃ。一ｏ∽ ０コ一０ や、ｏ●ｏに つっ″ＬｏαｏＬＣつ
一 Ｃ Ｏ Ｅ ］ ” ヽ つ く ｏ ９ 一Ｌ ﹂ Ｃ 〇 ﹁ ｏ Ｃ Ｃ Ｏ
一
，
Ｅ ｏ 一一 っ ０ 一 Ｌ 一 ０ 一
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Ｃｏ ¨一●一 一Ｌ“ ｏ一一 一ｏＣ〇 一りｏ■ ｏＬ﹂ ｏ
一φｎ●ＯＸ］
，
Ｃｏ 一ＪｏＥｏ Ｌ∝ 一ｏ つ ｏ一Ｌｏこ っに コ ●ウε 一い０ ﹁
つく 、 Ｌｏ ″εつ Ｃ ¨
，
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ぃ。 一●∽ ︰ ‘０ 一“ ｏ 一ｏ。 い］ ｏＯ ¨﹄軋
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●Ｅ ｏ一 一 “Ｘｏい つＣ ｏ いｏ 一● の ｏ ∽ ｏ コ
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つｏＬＬｏ﹂ｏこ ｏ＞０ 一く ﹂ｏ いｏ ¨“ 一ト ー 酬研﹁ｄｄ﹁Ｏｑ国
詈
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Capito:Ro● Ords,inc.Hollyw● ●d and Vino,H,"ywood,Calilo子 nia 90o20.(213)162‐ 6252
′
(｀
EXHIBIT R
■ of 4 pages
◎
RETURN RECEIPT REQUESTED
Appl-e Records, Inc.
C/O Apple Corps Limj.ted
29-30 St. James Street
Lonion Swl IHB, England
￨｀
At,tention
:
Gentlemen
:
Mr.
Aspinal
In reply to your Ie ter of January, 1976 and
audi-t
the
cl-aim of Prager & F ton dated October 31′
1975 enclosed therewith, set
rth below are the responses
of Capitol Records, Inc. to th points raised in said audit.
Part or all of ce
claims appear to be barreil
by the statute of limitations. Accord j.ngJ-y even where
capi to 1 acknowledges the correc ess of a claim, it is not
always possible to determine th anount act,ually due.
■.
Schedule I - Price Escalation:
to be made .by tne on page 8 is that paragraph 6 (a) requires Apple to deliver two new albums each
year and that since two albums we{e delivered in the period
9/■ /7■ through 8/■ /72 that Capitol cou■ d nOt e■ ect to take
an additional non-Beatle Master in\ partial satisfaction of
the requirements of Section 6.
yI
と
き
:[ill tte:f RIti:主 と 晋
:lil:: :elli:[B品
:き l:rtta::eFi・
. .
those masters which featire :he periPrnlances of all the
which EMI has accepted for release a$ recordings of the
Beatles and to which Apple acquired rfanufacturing rights.
"
EMI accepted and released "Bometime in New York
1967 recording agreembnt as a recording of
the Beatles and Apple acquired manufaQtgring rights to
City" under the
EXHfBIT
0
Appl-e Records,
June 15, !97
(｀
Page Two
R
2 of 4 pages
Inc.
6
that a1bum. The album ther fore was a Beatles Mas ter
without reference to the el ion letter.
claim is not
2.
Schedufe 2 ustment for "Sometime In
NeW York City
In light of the
adjustment is not. in order
nse
.
to schedule I above, this
Schedule 3 - Re
urns at Hi her Rates:
It vtas the intenti
of the parties that
3.
payments
be made by Capitol on net sal s. Net saLes is gross sal.es
less returns. The additional int should be made that there
is no way to tel1, urith respe to a given record returned,
when it r^ras soLd. lif o and Fi o methods are arbitrary in
addition to being inconsistent with
net sales.
based on
4.
(-
payrnent obligations
schedu■ e 4 - Inv
ustnent:
These records were
distributed. It was, as
claimed, an inventory adjustmen
The back-up information
is available for your examinati
5。
Schedule 5 - Excq{si.ve promotional Distribution:
I
The clai-m that there
album ancl 1000 units per single
such provision in the cont.ract
a limit of 5000 units per
s nonsense. There is no
d the provision is contrary to record industry practi and co[unon sense. The
nurnlcer of promotional records gi en by Capitol as a percentage of gross sales is, with
spect to APple (Neh' York)
product, lower than the average pitol has experienced
with
respect to comparable Capitol I
1 product.
6.
Price Escalation
ut■ on:
letter.
This cl.aim
ScheduLe
／ｔ
Some
answered
6 - Canadi
of the shipment doc
Plomotional
■
and 5 of this
Price Adiustment:
′
中・
１ＷＹ
１，
7.
is
on Dxcess
ents
are avail-ab1e
and
5電 IBIЪ ttes
∼
App■ e Records′
」une
(｀
■5′
Page Three
Inc.
1976
they refute most of this c
mainder of the claim is
S9′ 479。
8.
Schedu■ e 7 -
The
auditors cla
valid, at lea
49 is
aim. Capj-tol concludes the re1id
va
rted Record Club Sales:
■S correct.
in Part.
Schedule 8 -
9。
-
lub Sa
Price:
The c■ a■ m for
es at
Bu
Under the ■962 re rding agreement eapitoJ. had
the right to distribute Beat
es recordings through record
c■ ubs in the un■ ted States.
Betv,reen l-965 when that contract
expired and 」anuary Of ■967
n the 1967 recording agreement
was signed′ Capito■ made rec
recorded by the Beatles
between 1965 and 1967 availab e to the Capitol Record C1ub.
As of 1967, Capitol was told
t such recordings could not
be made available through the Club r^rithout the consent of
(｀
the Beatl-es. Obviously, it
respect to record.s made avait
\,ras avrare of the restri,ction.
provided that in the event r
recoral club in the United Sta
5? of English whoLesale and
s too late to do anything vrith
le to the Club before CapitoL
The 1967 recording agreement
rd.s were made available to a
s, royalties would be paid on
Record CLub was told this.
The Record Club continued to sqll copies of these records
until December 3■ ′ ■974 (with
se1l-off period ending December 3■ ′ ■975). ABKCO′ as
resentative of Apple agreed
to accept roya■ ties at 5t of
lish whotesale .
Price Escalation Record CIub Sales:
This claim is answered by item ■ above.
■0.
l■
cIaim.
.
Schedu■ e 9 - Pri
ustment
―
Am
-
x Sales:
This claim for s7′ 279.
is at least in part, a vatid
■2.
Rate Ad
schedu■ e
CaPitol and
wou■ d be ■3 3/4=′ not
is va■ id′ at least in
■0
-
Apple did
13 ■/41.
part.
ee that Apple's share
claim for
SS
,922.65
ヽ´
`
EXHIBIT R
4 of 4 Pages
Apple Records, Inc.
June 15, L97 6
Page Four
■3.
Schedule
Sales:
■■
Payments for the
were sent to EMI for App■
The claim ■s not va■ id.
14.
Schedu■ e
ths of
ds,
e
■2
-
April and May, ■972
Inc. on Novenber ■6′
■972.
x Rate Ad
ustrent:
The 17 t/22 figure set forth in the contract was
the amount Anpex had agreed th Capitol to pay for Beatle
product. Mr. Klein wished
get more and therefore wanted
the contract to shohr the who l7 l/22 payabte to Apple.
Of the 24* Ampex ultinately
eed to pay, Mr. Klein and Mr.
Chaum agreed in Septenber of 969 that it wou■ d be sp■ it
■0 ■/4= to Cap■ to■
■edged that he did
c■ a■ m
and ■3 3/4
make this
is not va■ id.
15. Incorrect
Char
to Appleo
Mr. K■ ein has acknow-
angement with capitol.
No。
This
■842:
Mr. Klein advised Ca ito■ in the fa■ l Of ■97■
I{rthat
Lennon desired his si 9■ e No. 1842 to be pressed
On green vinyl.
Capitol advi
Мro K■ ein that
this wou■ d
be more expensive than black
yl and Mr. Klein agreed
On behalf of Apple to absorb
e difference. A document
was
prepared
ｅ ｎ
Ｗ ・
■
to this effect bu
assume, with res
was never signed.
to the remaining matters
the audit that no laim has been made. Therefore,
we do not respond to the items
tioned, except to say that
Capitol had the right to scrap roduct under the l-969 contract and Capitol did provide j.dence of such 'scrapping to
ment ioned
App1e.