Hardcover Trade Book AgreementsA Drafting Guide for Author/Publisher Contracts

By Aaron Christensen

Table of Contents

I. Introduction........................................................................................................................... 3

II. Background Law................................................................................................................. 4

III. The Primary Features of an Author/Publisher Contract.....................................6A. The Grant......................................................................................................................................... 6

i. Publication Rights........................................................................................................................................7ii. Subsidiary Rights.........................................................................................................................................9

C. The Advance.................................................................................................................................... 9D. Royalties....................................................................................................................................... 11

IV. Optional Features........................................................................................................... 12A. Author preferences................................................................................................................... 12B. Right of first refusal and non-compete clauses................................................................12C. Delivery and rejection clauses...............................................................................................13C. Bonuses.......................................................................................................................................... 13D. Cross-collateralization............................................................................................................. 13

V. Conclusion.......................................................................................................................... 14

ANNOTATED BIBLIOGRAPHY............................................................................................ 15

MODEL AUTHOR/PUBLISHER CONTRACT....................................................................18

I. Introduction

Every year tens of thousands of new books are published and sold to the

general public. In 2010 publishers’ net sales revenue was $27.94 Billion. Just over

half of all the net sales revenue was generated by the publishing and sale of Trade

Books ($13.94 Billion).1 Trade books are works of fiction and non-fiction of general

interest (such as a novel, biography or book of poetry) sold to members of the public

primarily through regular bookstores. With so much of the industry occupied by the

publication and sale of trade books, each year thousands of authors enter into

contracts for the publication of their individual works.

The world of book publishing is an interesting one to approach from the

perspective of an attorney. Book publishing began as a small, largely closed,

industry. Most publishing houses began as family owned business with little need

for contracts, because no one broke their word. Tradition largely governed the

relationships between a publisher and author. Eventually business caught up to the

publishing industry and today while many small general-interest or specialty

publishers still survive, the majority of the larger publishing houses have been

joined into large conglomerates.2 This increase in size meant that publishing houses

now must answer to the bottom line, shareholders, and public markets generally. It

also means that individual authors are often left to fend for themselves.

1 http://www.publishers.org/press/44/ (New publishing sales survey details)2 Donald E. Biederman Et Al., Law and Business of the Entertainment Industries 317 (1992)

The disparity in negotiating power between the publisher and the author are

not the only obstacles that an attorney wishing to negotiate and draft a publishing

contract faces. Authors, eager to see the fruits of their labor, may not consult with an

attorney, preferring instead to trust in their own abilities and understanding, or in

the abilities of their agents. Additionally agents may see and attorney as

unnecessary or meddlesome and choose not to consult with one.

In addition, publication is often only the beginning for the ‘story’ that the

author is telling. An attorney should be aware that trade books are only the

beginning. An author’s work may generate additional revenue in a number of ways

including, paperback sales, book club sales, television, movies, and videogames.

For all of these reasons an attorney negotiating and drafting an

author/publisher contract for a new book should be aware and considerate when

determining what provisions to seek for their clients.

II. Background Law

Before wading into the different provisions that may be in an

author/publisher contract we should address the law that governs the contracts.

First, it is important to note that a majority of publishers today are located in New

York, and as such New York contract law will almost always govern. It is important

to investigate first, if the publisher is going to insist on New York Law applying, and

second the specific provisions governing New York contract law.

The second issue to be aware of is that the author/publisher contract, in

addition to being governed by the contract law of a specific state, and is also subject

to Federal Copyright law. Copyright law is governed exclusively by federal statute.

The current Copyright Act was passed in 1976, and from it we learn that a particular

subject matter can be copyrighted if it is original and fixed in a tangible medium. 3

Section 101 of the statute tells us that “A work is ‘fixed’ in a tangible medium of

expression when its embodiment in a copy or phonorecord, by or under the

authority of the author, is sufficiently permanent or stable to permit it to be

perceived, reproduced, or otherwise communicated for a period of more than

transitory duration.”4 Clearly in most instances a completed trade book would

qualify under the Copyright Act as fixed, assuming it is not a rough draft or

incomplete.

Unfortunately there is no similar definition for what is considered original. In

order to determine if an authors’ work is original we must look to relevant case law.

From which we are told that the court won’t strive to determine what is unique in

terms of art.5 This goes so far as to allow images, or stories, etc. form real life to be

copyrightable. Even though they may be found in the real world, and even though a

number of people could make a copy of the image or story, you are not allowed to

make a copy of someone else’s copy, thus even biographies and non-fiction novels

can be copyrighted. However, the courts have indicated that there does need to be a

minimum amount of creativity involved. Facts are not copyrightable, however the

manner in which they are compiled may be copyrightable.6 So in a biography the

facts of the individual’s life are not copyrightable, but the book itself would be

3 17 U.S.C. §1024 17 U.S.C. §1015 Bleistein v. Donaldson Lithographing Co.,188 U.S. 239 (1903).6 Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991).

copyrightable since the compilation of those facts would require some amount of

creativity.

Generally, speaking the trade book created by the author will be considered

copyrightable assuming that they have put in at the very least some amount of

original creativity in a form that qualifies as fixed under the statutory definition.

Because of this an attorney wishing to assist in the drafting of an author/publisher

contract, should review and familiarize themselves with the Copyright Act of 1976,

and other applicable copyright law.

III. The Primary Features of an Author/Publisher Contract.

In it’s simplest form the author/publisher contract will consist of three

essential parts, a grant from the author to the publisher of rights enabling the

publisher to use the author’s work, an up front payment to the author called an

advance, and the determination of royalties, the percentage from each book sold

that the author will receive.

A. The Grant

Generally the first clause in a publishing contract, “the grant” details the basic

rights that are given to the publisher by the author, these usually consist of two

separate bundles of rights. First, there is generally a description of the publication

rights and second it will address any subsidiary rights that are being granted to the

publisher. These rights are expected to be conveyed to the publisher, as it is the

entire reason for the contract.

i. Publication Rights

In terms of publication rights, “the grant” seeks to answer three questions:

(1) What publication rights are being granted? (2) In what territories? (3) For how

long? 7

The publication rights should always include the rights to publish the book in

hardback form. The publisher will likely also seek the sole and exclusive rights to

publish the work in trade, quality, and mass-market paperback form. In addition,

the publisher may also seek the rights to publish the work in a variety of other

formats including: book club, foreign editions, special editions, selections for

anthologies, etc. Generally all of these rights will be conveyed to the publisher,

unless the author has a specific reason not to. While each of these publication rights

are separately negotiable8 and do not all have to be given up, it is usually wiser to

grant the publisher these rights if they desire them. This will especially be true for a

new or unknown author who likely would not be able to sell the secondary

publication rights on his own elsewhere.

The publisher will usually have the facilities and means to publish a

hardcover edition on their own. Depending on the publisher they may, or may not

be able to publish paperback and other editions on their own, and thus may

ultimately sell the other publishing rights to another publisher. If the publisher

plans on selling the other publication rights they will often negotiate with the author

to split any amount made by the sale of these subsequent publication rights. Usually

7 Negotiating Contracts in the Entertainment Industry: Law Journal Seminars-Press8 Donald E. Biederman Et Al., Law and Business of the Entertainment Industries 322 (1992).

the publisher and author will split the proceeds from the sale of paperback or other

editions 50-50, although that amount may vary depending on how well known the

author is, (which would likely increase the authors percentage) and on how large

the original advance was (the larger the advance the smaller the authors percentage

would likely be).

In terms of where the work is to be published, the contract should generally

specify in what territories the publication rights are to be applied. This will usually

be for the American market, including Canada and the Philippines. “The grant” could

also apply to the British market, as well as foreign language markets. Once again,

unless the author has a specific reason not to grant rights for multiple markets, the

author will generally yield on these aspects. However, if foreign publication rights

are granted, the author and his attorney should keep in mind that they might want

provisions allowing for review of any translation done, ensuring faithfulness to the

original work. They may also desire to specify in the contract how accounting for

sales in other markets will be conducted. 9

The term of the grant of rights will usually be, the full term of the copyright

and any renewals or extensions that may occur. Under current copyright law, the

term of copyright is the author’s life plus fifty years regardless of the date of original

publication. However, there are termination and recapture provisions, found in

Section 203, for all contracts executed after January 1, 1978, which states that

termination is permitted after 35 years.10

9 Ibid 32010 17 U.S.C. § 203

ii. Subsidiary Rights

In addition to the publication rights there are a number of other subsidiary

rights that should be addressed separately in the contract. This includes issues such

as, e-book publications, merchandising rights, movie and television rights, video

games, and other ways that the work may be presented.

Like the publishing rights, each of these rights will often be given to the

publisher with an agreement that if said rights are sold the author will receive a

portion of the sale. Often the split in the sale of the subsidiary rights will likewise be

50-50 between the author and the publisher, however this can vary depending on

the popularity of the author, and the size of the advance.

In addition to negotiating the division of any profits from the sale of these

subsidiary rights, the author may want to negotiate the amount of creative control

over any subsequent use of his work he retains, and the length of time that the

publisher will have for selling these rights before they revert to the author.

C. The Advance

The advance is a very important aspect of the contract to the author. It is

usually the only money that the author will see from the contract for some time. An

advance is a sum of money paid in anticipation of the profits that the book will

eventually earn, it represents the amount of risk that the publisher is willing to take

on the book, and will usually need to sustain the author until they begin to see their

percentage of the profit from sales in the form of royalties. There is no set monetary

amount for an advance, but rather the amount of the advance will depend on a

variety of factors, including: prestige of the author, rights granted to the publisher,

and whether the publisher believes the book will be a high seller. The advance can

range from around $500 for new authors, or works that the publisher doesn’t

believe will generate large revenue, to seven digit advances for popular authors or

works that are likely to be best sellers.

Often times the advance will not be paid in one lump sum, but rather will be

split up to encourage the author to complete his work in a timely manner. It might

be set up as half on signing and half on submission of the manuscript, or in fourths:

¼ on signing, ¼ after submission of a portion of the manuscript, ¼ after final

submission of the manuscript and, ¼ upon publication.

One of the most important questions to address when drafting a contract for

the publication of a trade book is whether or not the author can be required to

return the advance. Generally speaking, so long as the author does not breach the

agreement by failing to deliver the manuscript as promised, if the manuscript gets

published then the author is not required to return the advance. This is true even if

sales of the book do not generate enough royalties for the publisher to recoup the

cost of the advance. This is a method in which a publisher can lose a great deal of

money, since they are generally planning on a book selling enough that royalties will

not just meet, but surpass the original advance given. Because of the risk of loss

involved some publishers have begun attempting to include clauses in the contract

that require the author to reimburse the publisher for any unearned advance.

However these clauses have been strongly resisted by authors, and their agents, and

as such have not reached any large degree of popularity. However, if the delivery of

the manuscript is late, or is never delivered then the publisher is generally allowed

to demand the return of the entire advance.

D. Royalties

Royalty provisions are incredibly important to an author because royaltyies

are where an author can make a good profit from his work. A royalty is the

percentage of the “retail price” (regardless of the price the bookstore sells it for)

that the author receives for each book sold. Industry standards for royalties are

usually been 10-15% for hardback books. This will depend in part upon the author’s

“track record”, and may also be adjusted at certain sales figures (e.g., 10% for the

first 10,000 copies, 12.5% on the next 5,000 copies and 15% for all copies sold in

excess of 15,000). Generally before an author can realize any royalties for a book

they must earn back the amount of their advance.

It is however very important, in addition to defining the actual percentages,

to define how sales are calculated, this is because when a publisher sells a book to a

bookstore it may be on consignment such that unsold books are fully returnable,

which could be counted against the authors sales.

The publisher will generally release a royalty statement, indicating to the

author how many of his books have been sold and what amount he is entitled too in

terms of royalties. Because the publisher wants to make a proper accounting of total

sales figures they will generally only release royalty statements twice a year.

However, the time of payment, and the publisher’s duty to account for their

calculated sales figures should not be accepted blindly, and can be adjusted to fit the

author’s needs. Additionally, provisions for an outside audit, and setting legal rates

of interest can be included to help benefit the author.

IV. Optional Features

While “the grant”, the advance, and royalties will likely occupy the majority

of negotiations that take place between an author and a publisher, there are a

number of other provisions that can be included in the contract.

A. Author preferences

The contract may include provisions that allow either the author or the

publisher to set the publication date or promotional requirements for the work. You

may include clauses that allow the author to demand the publisher publish within a

certain amount of time, or provisions allowing the author to obtain a certain

number of copies for himself and close friends for personal use. If the author has

exceptional bargaining power they may even include provisions governing the

book’s jacket cover or title.

B. Right of first refusal and non-compete clauses

The publisher may seek a right of first refusal on the author’s future works,

which can be useful if the author wishes to establish a relationship with the

publisher, but should not be considered mandatory. The publisher may also seek to

include a non-compete provision. This provision is frowned upon by the Author’s

Guild and is generally not invoked unless the author produces a work that is in

direct competition with the work in question, and as such is rarely of much concern.

C. Delivery and rejection clauses

Frequently the publisher will have the contract include a provision to govern

when, and how, delivery of the author’s manuscript should occur.

The publisher may also wish to include a rejection clause in case he is

unsatisfied with the manuscript, or simply decides that he no longer wishes to

publish the work. Generally the law allows a publisher to reject a book for any

reason so long as it does so in good faith. If a manuscript is rejected in good faith for

editorial reasons, then the publisher can require that the advance be returned to

them. If however, a manuscript is rejected for financial reasons the author is usually

not required to return the advance.

C. Bonuses

The author may be able to negotiate bonuses either as an additional advance,

or separate of the advance and royalty payment structure. These bonuses are

usually for if the book reaches the bestseller list, remains on the bestseller list for a

certain amount of time, or wins an award such as a Pulitzer Prize. These bonuses

can very greatly in amount, and will depend in part on the popularity of the author,

likelihood of being an award winning or bestselling book.

D. Cross-collateralization.

Ocasionally a publisher will agree to a multiple book contract, this is

especially common if they are seeking to obtain the rights to a series, or if they are

attempting to establish a relationship with a popular author. This is wonderful

opportunity for the author as long as all of the terms of the agreement are

acceptable, however the attorney responsible for reviewing the agreement should

ensure that the contract does not call for cross-collateralization. Cross-

collateralization requires the author to earn back the advance for all books in the

agreement prior to receiving any royalties, as opposed to earning royalties on each

individual book when the advance has been recuperated for that particular book. If

the author accepts a multiple book contract with cross-collateralization he may not

receive what he would have for each book separately. For example if three books

were contracted for and only one is profitable, without cross-collateralization the

author would get the advance for each book separately and would begin making

money on the profitable book once the advance was recovered. The author would

then get to keep the other advances even if the royalties never covered the advance

on each book. With cross collateralization the author would simply never see any

royalties because he would never overcome the advance of all three books.

V. Conclusion

Whether you are representing a publisher or an author, navigating an

author/publisher contract can seem intimidating, but so long as you are willing to

read the individual provisions carefully, there is no reason that you can’t negotiate

and draft a contract that will be beneficial to both parties.

ANNOTATED BIBLIOGRAPHY

Donald E. Biederman, Edward P. Pierson, Martin E. Silfen, Jeanne A. Glasser, Robert C. Berry; Law and Business of the Entertainment Industries (Praeger eds., 2nd ed., 1992)

Chapter 1 deals with the relationships between entertainers, agents, and

attorneys and can be helpful in understanding the jobs that different

intermediaries perform in the entertainment industry.

Chapter 4 deals exclusively with Literary Publishing and does a good job

outlining individual provisions that are included in an author-publisher

contract. It also has a number of case summaries used to demonstrate rules of

the industry where defined by case law.

Because the order of the different provisions that this book explains can be

slightly confusing it might be best to use this resource after first gaining a

basic grasp of how the book publication industry works.

John F. Breglio; Negotiating Contracts in the Entertainment Industry: Law Journal Seminars-Press – Richard Danny; Author/Agent and Author/Publisher Contracts (1984)

This book has a good, if slightly older, explanation of publishing and what the

Author/Publisher contract is meant to accomplish.

It also includes a number of selections from the Author’s Guild explaining

different provisions in the contract and showing samples.

Bill Adler; Inside Publishing (The Bobbs-Merril Company Inc. eds, 1982)

This book has a number of chapters that explain publishing clearly,

concisely, and in understandable language.

He is an agent discussing publishing for authors and how it relates to agents

and attorneys.

Some of the ideas are older and outdated, however it does a wonderful job

of explaining the attorney, agent and authors respective jobs.

It also outlines when and how attorneys sometimes run into trouble with

authors and agents. As such chapter seven would be worth a read to know

what pitfalls to avoid to maintain a good relationship with the author and

agent.

The Authors Guild

(http://www.authorsguild.org/)

The Authors Guild is an organization that exists for the promotion of

Authors and assisting them in their endeavors.

Although much of their website requires you to be a dues paying member

there are still a number of sections that can be helpful in understanding the

relationship between an author and a publisher.

There are also articles covering the most recent legal issues between

authors and publishers.

If you are a dues paying member there are a number of legal drafting aids

and services that you can receive from the Authors Guild as well. Some of

these aids can be found on other websites, but the Authors Guild is a good

starting point.

The Authors Guild website can be somewhat misleading because some of

what they indicate are ideals for authors to strive for, and not necessarily

representative of what actually takes place in the negotiation of an

author/publisher contract.

Association of American Publishers

http://www.publishers.org

The Association of American Publishers is an organization that represents

the publishers of America and their varied interests.

The Association supplies a great deal of data for support in publishing and

as such can be useful in seeking to better understand the industry.

There is however almost no direct information regarding the

author/publisher contract, and as such it should be viewed primarily as a

secondary source of information to assist in gathering data for the

negotiation and drafting of the author/publisher contract.

Leon Friedman, Trade Books, in 3 Entertainment Industry Contracts, Form # 41-1

(Donald C. Farber ed., LexisNexis 2008)

The Matthew Bender & Company, Inc. also has a book form of this form. It

contains a multitude sample contracts in the book publishing area, and in

the area of trade books in particular.

The information can be difficult to wade through as it is not always in the

most logical order. However, the information is useful and if you already

have a basic understanding of how the author/publisher contract you

should be able to gain very valuable insights.

Good Faith Rejection and Specific Performance in Publishing Contracts: Safeguarding the Author’s Reasonable Expectations., 51 Brooklyn L. Rev. 95

The beginning of this article has a good summary of how the publishing

process works and could be a good starting point for someone with little to

no experience with the publishing process as it is easy to read and

understand.

The second part of the article and beyond goes in depth discussing

rejections of the manuscript by the publisher, and the legal question of

whether the author make seek specific performance or not. (A subject not

addressed in this drafting guide).

MODEL AUTHOR/PUBLISHER CONTRACT

For a Hardcover Trade Book

AGREEMENT, entered into this (day) of (month), 1991 between (name and address of publishing company), (hereinafter called “Publisher”), and (name and address of author) (hereinafter called “Author”). In consideration of the premises and promises hereinafter set forth, Publisher and Author agree together as follows with respect to the work tentatively entitled (title and description of booki) (hereinafter called “the Work”).

1. RIGHTS GRANTED: Author grants and assigns to Publisher the following rights and privileges in, to and in connection with the Work during the full terms of copyright and all renewals and extensions thereof, under the present or future laws of any country covered by this Agreement:(e.g., The sole and exclusive right to publish and sell the Work or cause the same to be published and sold in book form in the English language in the United States of America, its dependencies, in the Republic of the Philippines, and in the Dominion of Canada. In addition, Publisher shall have the non-exclusive rights to sell the Work in the English language in book form in all other parts of the world, excluding the British Commonwealth and Empire (excluding Canada) as constituted at the date of this Agreement.)ii

2. ADVANCES: Subject to the provisions hereof, Publisher agrees to pay to Author as an advance against royalties to be earned at the rates hereinafter set forth and on account of all monies accruing to Author under this Agreement, the sum of ($ amount) payable (amount) upon signature of this Agreement; ($ amount) upon delivery and acceptance of one-half (1/2) the completed manuscript; and ($ amount) upon delivery and acceptance of the completed manuscript.If the Work appears on any best seller list appearing in the New York Times Sunday edition (either print or electronic version), then the author shall receive a bonus of [specify, e.g., $10,000] for each week that the book appears on that list. Said amounts shall not be considered an advance but simply a bonus not to be deducted from royalties. If the Work receives an award from an established literary organization (such as the Pulitzer Prize, the National Book Award, or similar awards) then the Author shall receive an additional bonus of [specify, e.g., $25,000] not to be deducted from royalties. Said amounts shall be paid to the Author within 30 days of the triggering event.iii

3. ROYALTIES: Publisher shall pay to Author royalties as follows, based upon net retail sales less a reserve for returns of (—%).iv

ALTERNATIVE ROYALTY CLAUSE (I)

3. ROYALTIES: Publisher shall pay to the Author royalties as follows, based upon the suggested catalogue retail price. The suggested cover price used by the Publisher to pass through the Publisher’s freight charges for shipments of the Work to retailers shall not be used in computing royalties to the Author. The suggested catalogue retail price shall be the basis for such computation.v

(a) Except as provided hereinafter, a royalty upon the regular trade edition sold in the United States of America of ten percent (10%) of the retail price on the first 5,000 copies sold in regular course; twelve and one half percent (12½%) on the next 5,000 copies sold; and fifteen percent (15%) on all copies sold thereafter, except that on reprinting of 2,500 copies or fewer made during the twelve (12) months immediately after the date of first publication the royalties shall be ten percent (10%) on copies sold unless there shall be two (2) or more reprintings of at least 2,500 copies made within the first six (6) months after the first date of publication, which printings will then earn royalties at the regular stipulated rate. After twelve (12) months from the date of first publication, one-half (1/2) of the regular stipulated rate on all copies sold from a reprinting of 2,500 copies or less, providing that the regular sales in the six (6) months period immediately preceding such reprinting do not exceed five hundred (500) copies; if such sales do exceed five hundred (500) copies, ten percent (10%) on such reprintings. These reduced royalties are provided because of the increased cost of manufacture of small reprintings and to enable Publisher to keep the work in print and in circulation as fully and as long as possible.vi

(b) A royalty of twelve and one-half percent (12 1/2%) of the amount received by Publisher on all sales in Canada of copies of any hardcover edition published by Publisher.vii

(c) Two-thirds (2/3) of any amount received by Publisher for the sale of the right to publish a hardcover edition of the Work on a royalty basis or for an outright sum in Canada.

(d) A royalty of ten percent (10%) of the amount received by Publisher on sales of copies or unbound sheets of any hardcover edition of the Work published by Publisher, sold outside the continental limits of the United States of America and Canada, and on sales at a discount of sixty percent (60%) or more from the retail price to reading circles, to recognized book clubs, and to organizations outside the regular book-selling channels.viii

(e) A royalty of ten percent (10%) of the retail price of each copy sold within the continental limits of the United States of America of any hardcover edition issued by Publisher at a retail price of not more than two-thirds (2/3) of the original retail price.

(f) Fifty percent (50%) of any license fee or royalty charge for the right granted another publisher to issue and distribute a reprint edition or visual

reproduction (microfilm) of the Work.

(g) Fifty percent (50%) of the gross amount paid by a book club as royalty for the right to publish the Work in whole or in part for distribution to its members. If, by the terms of such license for the right to publish an edition by a book club, Publisher is required to provide the book club with more than one complete set of plates and binder’s dies, the cost of such extra sets of plates and binder’s dies shall be borne equally by Author and Publisher.

(h) Fifty percent (50%) of the amount actually received by Publisher for permissions to publish extracts from the Work.

(i) Ten percent (10%) of the amount received by Publisher for the cloth-bound edition and five percent (5%) for a lower-price edition on sales of copies of overstock at a discount between fifty percent (50%) and sixty percent (60%) or more, or for the use of the plates by any governmental agency. No royalties shall be payable on copies furnished gratis to Author for review, advertising, sample, publicity, promotion, or like purposes, or on copies destroyed by fire or water, or on copies sold at or below the cost of manufacture.ix

  (j) Where the discount to jobbers or to wholesale distributors or booksellers (except as provided for in Subclauses 3(d) and 3(i) hereof) on copies of any edition published by Publisher is forty-eight percent (48%) or more, Publisher shall pay Author the prevailing rate of royalty less one-half (1/2) difference between a forty-four percent (44%) discount and the discount granted [it being understood that the amount paid to Author shall not be less than one-half (1/2) the stipulated royalty].x

(k) On hardcover copies sold through mail order coupon advertising or direct-by-mail circulation: Five percent (5%) of the net amount received by Publisher.

(l) On rack-size paperback copies sold in the United States, its territories and possessions: eight percent (8%) of the retail cover price on the first 150,000 copies sold; ten percent (10%) of the retail cover price on all copies sold thereafter.

(m) On trade paperback copies sold in the United States, its territories and possessions: six percent (6%) of the retail cover price on the first 20,000 copies sold and seven and one-half percent (7 ½%) of the retail cover price on all copies sold above 20,000 copies.xi

(n) On paperback copies sold in foreign countries: four percent (4%) of the United States retail cover price on all such copies sold.

(o) On paperback copies sold to a bona-fide book club or sold to be distributed as a premium: Five percent (5%) of the net amount received by Publisher.

(p) On paperback copies sold in bulk to organizations other than book clubs, on a non-returnable basis, for the specific purpose of achieving distribution in special markets: One-half (1/2) of the prevailing royalty rate set forth in Subclause 3(a) above. Publisher shall have the right to imprint the colophon of the organization on such copies for the purpose of identification, and such special printings shall still be considered Publisher’s editions.

(q) If, in the opinion of Publisher, the paperback edition shall have ceased to have a remunerative sale, Publisher shall be at liberty to dispose of all or part of the existing stock and will pay Proprietor a royalty of Five percent (5%) of the net amount received from the sale thereof. No royalties shall be paid on any such copies sold at or below cost, but, all copies sold at Ten Cents (10 ¢) or less shall be considered as remainders and shall not be subject to royalty.

(r) On paperback copies sold through mail orders: One-half (1/2) of the prevailing paperback royalty on all copies sold.

(s) Publisher shall have the further right to break up into hardcover and/or paperback editions any of the material in the Work, and to use the material separately at any time. Publisher shall have the right to publish the material in any number of volumes it seems suitable at any time. If there is a Continuity Program of the Work either through the mail or in chain and supermarkets, the royalty payable shall be Five percent (5%) of the net amount received by Publisher on all such copies sold.

No royalties shall be payable on copies of either the hardcover or paperback edition damaged or destroyed or on copies furnished gratis for review, publicity or like purposes.Authors right to payments shall be subject to Publisher’s prior right to deduct any and all advance payments made by Publisher to Author. However, Publisher shall account to Author for any reserve against returns within (six months) following the end of the period within which book stores or other purchasers may obtain credit for returned books.

4. SUBSIDIARY RIGHTS:(a) Publisher is further granted the exclusive right, in the territories set forth in Clause 1, to sell or license (including among others, the licensing of Publisher’s own divisions) the use of the Work, for publication in whole or part, in any form, upon such terms as it deems advisable. The net proceeds of such sales or licenses shall be divided as follows, and Author’s share, less the amount of any advances then unearned, shall be paid at the time of the next accounting:

  Author’sShare

Publisher’sShare

Reprint licenses including mass market paperback or trade paperback:

50 50

First Serial (use of serializations, condensations, excerpts, digests, etc., in newspapers, magazines or other periodicals before publication of the Work in book form in the relevant territory)

90 10

Second Serial (use of serializations, condensations, excerpts, digests, etc., in newspapers, magazines, or other periodicals or books after publication of the Work in book form in the relevant territory)

50 50

Book Club 50 50

Storage, Retrieval, Microfilm, Microfiche, Other forms of non-dramatic electronic reproduction, including non-dramatic readings of the entire book or portions thereof

50 50

British Hardcover and/or Paperback (which may include the right of such licensee to sublicense ancillary rights in that market)

80 20

Translation 75 25

Other Book Publication (including, but not limited to, hardcover, large format paperback, large print editions, mail order, calendar)

50 50

Commercial and Merchandising (derivative products such as the use of a title or character for greeting cards, clothing)

50 50

Performance (television, radio, dramatic, motion picture rights and allied merchandising rights derived there from)

90 10

Electronic Publishing (such as computer software, audio and video cassettes)

50 50

Alternative Electronic Rights Provision Electronic Publishing (the right to record and transmit the verbatim text of the Work or parts of the Work by any means, electronic or otherwise, the result of which serves as a substitute for sales of the work in book form)

50 50

If Publisher exercises any of the foregoing rights itself in lieu of sublicensing same, the royalty rates, where not otherwise specified above, shall be subject to agreement between the parties.(b) If Author controls any of the foregoing rights which Publisher has the capacity to exercise itself, Author agrees to give Publisher the right of first refusal for the separate acquisition of such rights before licensing such rights elsewhere.(c) Publication of the work in Braille, or photocopying, recording and microfilming the work for the physically handicapped: Publisher is hereby authorized to license such publication without fee and with no royalty to Author. Should any compensation be received, however, it shall be divided equally between Author and Publisher.xii

ADDITIONAL “PASS-THROUGH” CLAUSEAfter the advance has been recouped by Publisher, Publisher agrees to pay Author, Author’s share of net licensing revenue received by Publisher over $1,000 within thirty (30) days of receipt by Publisher.xiii

ELECTRONIC RIGHTS PROVISIONSALTERNATIVE ELECTRONIC RIGHTS

CLAUSE (I)The Publisher shall also have the following rights with respect to which the Publisher alone may make arrangements both on its own behalf and on behalf of the author in the exclusive market granted herein, and the division of the net receipts from the sale or other disposition of these rights shall be as follows:

(a) Publication or utilization of the text of the work, or any portion thereof, in any form by any electronic, computerized, or any other means now known or hereafter invented by which the text may be stored, preserved, entered, displayed, transmitted, communicated, disclosed: fifty percent (50%) to the author and fifty percent (50%) to the publisher.

(b) In the event the rights noted above in subclause (a) are conveyed, it is understood that the exact text may be communicated, transmitted or performed or through sound recordings in connection with the electronic or computerized versions of the text.xiv

5. ALTERNATIVE AUDIT RIGHTS CLAUSEAuthor may, at its own expense, audit the books and records of Publisher relating to the publication of the Work pursuant to this agreement at the place where Publisher maintains such books and records in order to verify statements rendered to Author. Any such audit shall be conducted only by a reputable public accountant during reasonable business hours in such manner as not to interfere with Publisher’s normal business activities. An audit with respect to any statement shall not commence later than twelve (12) months from the date of dispatch to Author of such statement nor shall any audit continue for longer than five (5) consecutive business days nor shall audits be made more frequently than twice annually, nor shall the records supporting any such statements be audited more than once. All statements rendered hereunder shall be binding upon Author and not subject to objection for any reason unless such objection is made in writing stating the basis thereof and delivered to Publisher within twelve (12) months from delivery of such statement, or if an audit is commenced prior thereto, within thirty (30) days from the completion of the relative audit.xv

6. DELIVERY: Author agrees to deliver to Publisher on or before (date) in duplicate, and in final revised form and content satisfactory to Publisher, an English-language manuscript of approximately (number) words. In addition, Author shall deliver the text of the entire Work (and any ancillary matter such as charts, pictures and the like) in an electronic file compatible with the Publisher’s computerized system.

Unless postponed by mutual agreement, failure to make delivery of the manuscript of the work on or before the date shall be deemed just cause for Publisher, at its option, to terminate this Agreement by giving written notice, whereupon Author agrees to repay forthwith all monies which may have been advanced hereunder and shall further pay other damages as Publisher may sustain by reason of such breach. The foregoing does not exclude any other remedies at law or equity that the publisher may have. It is understood and agreed that no duty shall devolve upon Publisher under this Agreement until such time as the manuscript has been completed to the satisfaction of Publisher. It is understood that in the ordinary course of preparing the manuscript for the printer Publisher is authorized to exercise editorial privilege and to make the manuscript conform to its house style in spelling, punctuation and usage.xvi

Publisher shall have the right, in its sole discretion and at its sole cost and expense, to submit the Work, or any parts thereof, to its legal counsel for review. Publisher shall have ninety (90) days after Publisher’s receipt of the Work in Manuscript Form to notify Author in writing whether Publisher shall submit the Work to its legal counsel for review. If Publisher so notifies Author, then, notwithstanding anything herein contained, the Work shall not be deemed to be satisfactory to Publisher hereunder unless and until any and all changes which may be required by Publisher’s legal counsel have been made. Additionally, payment of the advance or any part thereof or any other sums to Author hereunder, including any payment upon or following delivery of the Work, shall not be deemed to be evidence either that the Work is satisfactory to Publisher, that Author has fulfilled his obligations hereunder, or that Publisher has waived any of its rights hereunder. It is specifically agreed and understood by the parties that nothing contained in this subparagraph shall in any way alter or vary any of Publisher’s rights hereunder including but not limited to Publisher’s rights pursuant to Author’s representations and warranties set forth in Clause _________________and the indemnification provisions of Clause _________________.xvii

If the Author makes changes in the Work as are recommended by the Publisher’s counsel, the Author’s indemnity for a judgment shall be limited to 50% to the extent that such judgment arises from matter within the scope of the review by Publisher’s counsel and as to which the Author made full disclosure to the Publisher. If the Author will not make changes recommended by the Publisher’s counsel, the Publisher will not be required to publish the Work and shall have the right to recover from the Author any advances made to the Author under this agreement. When such advances are fully repaid, this agreement shall terminate.xviii

7. PERMISSIONS:(a) If permission from others is required for publication of any material contained in the Work or for the exercise of any other right conferred by this Agreement, Author agrees to obtain such permissions at Author’s own expense, and to deliver such permissions, in form acceptable to Publisher, on the due date for the final manuscript. Permissions shall cover the territorial market and uses as licensed herein, as specified in Clause 1 hereunder.(b) Copies of the signed agreements between Author and each of the contributors

shall be attached to this Agreement and shall become a part thereof.xix

8. REJECTION OF MANUSCRIPT: If, in the opinion of Publisher, the manuscript is unacceptable or unsatisfactory to Publisher, Publisher may reject it by written notice within sixty (60) days of delivery, in which event any sums previously advanced under this agreement pursuant to Clause 2 shall be repaid by Author, this Agreement shall be deemed terminated, and there shall be no further obligation upon Publisher to publish the Work or to make any further payment hereunder.xx

ALTERNATIVE CLAUSE8.  TIME FOR ACCEPTANCE: Publisher will convey to Author its comments concerning the acceptability of the Work or any portion thereof delivered in accordance with Clause 6 above or the need for revisions within ninety (90) days of its receipt of the completed Work or any portion thereof. If Publisher concludes that the Work or any portion thereof is unacceptable but could be revised to Publisher’s satisfaction in a timely fashion, Publisher and Author shall agree on an appropriate period of time for the revision process. Should Publisher conclude that the Work or any portion thereof as first submitted cannot be revised to its satisfaction within a timely period or should Publisher find the revised Work or any portion thereof unacceptable for any reason, Publisher may reject it. Upon rejection of one-half the manuscript as described in Clause 1 above, Author may retain one thousand dollars ($1,000). Upon rejection of the completed manuscript as described in clause above, Author may retain two thousand dollars ($2,000) and all other monies paid to Author by Publisher shall be returned to Publisher and Publisher shall not be obligated to make any further payment. Thereafter Author may grant the rights to the Work to another publisher subject to Author’s obligation to repay Publisher the retained sum out of first monies received from such other publisher for the Work, and, except for such repayment obligation, this Agreement shall be deemed terminated.xxi

9. EDITORIAL CHANGES: Publisher is authorized, in its sole discretion, to make any editorial changes, deletions, abridgment and condensation whatsoever in the text of the Work, and is further authorized to title, sub-title and change the title and the chapters of the Work, and such authorization shall extend to each reprinting of same in any form.Publisher reserves the right to omit any part of the Work submitted by Author, and to request substitutions or additional material prior to publication; and Author agrees to make such revisions, substitutions and alterations in the Work as Publisher may reasonably request. Final decision as to title and retail price shall be within Publisher’s sole discretion.Author agrees to read, revise, correct and return promptly galleys of the Work within ten (10) days of receipt. If Author fails to return such proofs within such agreed upon period of time, Publisher shall have the right to publish the Work in the condition it was deemed satisfactory and acceptable to Publisher, subject to the provisions of Clause 6 concerning the customary preparation for the printer. Author agrees to have charged against it any sums accruing to it under the terms of this Agreement, the cost of alterations in type or in plates, required by Author, other

than those due to printer’s errors, in excess of ten (10%) of the cost of setting type. If Publisher elects to charge these costs against sums accruing to Author hereunder and such sums do not cover the cost within one (1) year from the date of first publication, Author shall at that time on notice from Publisher pay in cash the balance of the costs outstanding. Publisher will forward a statement of charges at Author’s request any time after thirty (30) days of the receipt of the printer’s bills, and the corrected proofs will be presented on request for Author’s inspection.xxii

ALTERNATIVE CLAUSE9. EDITORIAL CHANGES:(a) No changes in the manuscript or the provisional title shall be made without the consent of Author. However, Publisher shall not be obligated to publish a work that in its opinion violates the copyright of any third party or the right of privacy of any person or contains libelous or obscene matter.xxiii

(b) Prior to publication of the Work, Publisher shall submit to Author for his approval (which approval shall not be unreasonably withheld) a copy of the Work as copyedited by Publisher (the “Edited Copy”). If Publisher does not receive written notice from Author within twenty (20) days after Author’s receipt of the Edited Copy stating Author’s disapproval of same and specifying Author’s objections thereto, Author shall be deemed to have approved the Edited Copy submitted to him. If Publisher receives from Author, within this ten (10) day period, written notice of Author’s disapproval specifying his objections to the Edited Copy, Publisher and Author shall work together, in good faith, to revise the Work so that it is satisfactory to both parties, after which time Publisher shall re-submit a revised, Edited Copy of the Work to Author for Author’s approval, and which revised, Edited Copy (and any subsequent revised, Edited Copies) shall be subject to all terms and conditions of this clause. Publisher shall not alter the text of the Work as finally approved by Author without Author’s consent. All licenses entered into by Publisher with respect to reprints of the Work in completed form shall expressly prohibit any changes in the text of the Work without the written consent of Author. Publisher shall not be liable to Author should a licensee breach such a provision.xxiv

10. COPYRIGHT: Publisher is authorized, upon first publication of the Work, to secure copyright to it in the name of (name of Author) to credit (name of author) as Author and to use his name, picture, likeness for advertising purposes or purposes of trade in connection with the Work as finally published hereunder, as well as the name, picture, likeness, for advertising purposes or purposes of trade in connection with the Work as finally published of any and all of the contributors contributing materials to the Work, and to arrange for sale of the Work in Canada simultaneously with first sale in the United States. Author agrees to make timely application for renewals and extensions of the copyright. With respect to any portions of the Work that are or have been published prior to publication of the Work by Publisher, Publisher shall see to it that any such publication bears a proper copyright notice as specified by the United States Copyright Law and the Universal Copyright Convention. If, in connection with any such publication, Author shall promptly deliver to Publisher an assignment of such copyright in form for recordation in the

Copyright office. If such publication is outside the United States, Author shall promptly deliver to Publisher three (3) copies of the Work or part thereof so published and inform Publisher of the date of such publication.xxv

11. PUBLICATION DATE: Publisher agrees to publish and commence distribution of the hardcover edition within twelve months after approval and acceptance of Author’s final manuscript. Unless otherwise agreed, the paperback edition will be published not earlier than twelve months after hardcover publication and not later than twelve months after hardcover publication.xxvi

12. MANNER OF PUBLICATION: Publisher shall have the right: (1) to publish the work in such style as it deems best suited to the sale of the work; (2) to fix or alter the prices at which the work shall be sold; (3) to determine the method and means of advertising, publicizing, and selling the work, the number and destination of free copies, and all other publishing details, including the number of copies to be printed, form, style, size, type, paper to be used and like details.xxvii

13. DEMAND FOR PUBLICATION: If Publisher shall fail to publish and distribute either the hardcover or paperback edition of the Work by the date, Author may, at any time after the date, serve a written demand on Publisher, by Registered Mail, return receipt requested, requiring Publisher to commence manufacture and publication within six (6) months from the date of such written demand, and if Publisher shall fail to comply with such written demand, this Agreement shall be terminated forthwith on expiration of the six (6) months. In such instance, however, such payments as shall have been made to Author as advances shall constitute full payment to Author for all his rights, efforts and all materials supplied under this Agreement and no other damages, claims, actions or proceedings, either legal or equitable, founded on such breach, default or failure to publish by Publisher may be claimed, instituted or maintained by Author against Publisher. However, Publisher shall not be obligated to publish a work that in its opinion violates the common law or statutory copyright or the work of privacy of any person or contains libelous or obscene matter.xxviii

14. AUTHOR COPIES: On publication, Publisher shall give Author ten (10) copies of the hardcover and paperback editions of the published Work, and should Author desire any more copies for personal use they shall be supplied at forty percent (40%) of the retail price if available for such use. Copies thus supplied shall not be resold.xxix

15. OUT-OF-PRINT:(a) If, in the sole discretion and determination of Publisher, further publication and sale of either the hardcover or paperback edition of the Work will no longer be a profitable venture, Publisher may discontinue publishing, distributing and selling same.xxx

(b) If an edition of the Work is no longer in print in any form five (5) years from the date of first publication, Author may notify Publisher by Registered Mail, return

receipt requested, the author desires to terminate this Agreement with respect to that Edition only unless Publisher brings out a new edition. If, within nine (9) months following receipt of such notice, Publisher has not signified his intention to publish a new edition, this Agreement shall terminate with respect to that edition only at the end of this nine (9) months, without further notice, and all rights hereunder granted to that edition only to Publisher shall revert to Author. The Work shall not be deemed “out of print” within the meaning of this clause as long as it is available for sale either from stock, from Publisher’s warehouse, or in the field, or is under contract for publication anywhere in the United States.xxxi

16. WARRANTIES: Author warrants and represents that the Work is original and has not before been published; that he is the sole Author of the Work and has full power, free of any prior contract, lien or rights of any nature in anyone which might interfere therewith, to enter into this Agreement and to grant the rights hereby conveyed to Publisher; that the Work contains no matter which is libelous, obscene, or otherwise unlawful, infringes no right of privacy, proprietary right or copyright (whether statutory or common law); that he has not heretofore and will not hereafter during the term of this agreement enter into any agreement or understanding with any person, firm or corporation other than Publisher for the rights granted hereunder. If Author shall breach this warranty, Publisher shall be entitled to injunctive relief in addition to all other remedies that may be available to it. Author further agrees that he will hold Publisher, its distributors, employees, licensees, agents and any retailer harmless against any suit, claim, demand, proceeding, prosecution, recovery or penalty and any expense, including attorneys’ and litigation expenses arising out of same, by reason of any claim or violation of any of the foregoing warranties or representations.In defending any such claim, demand, action or proceeding, Publisher shall have the right to select counsel and the right to withhold amounts otherwise payable to Author under this or any other agreement and to apply such amounts (as required) in satisfaction of the foregoing indemnities. If monies are withheld under this clause, they shall be set aside in an interest bearing account, and any balance after payment of legal fees, expenses, settlement costs and/or judgments shall be paid to Author along with the interest on such amount. The foregoing warranties and indemnities shall be effective without regard to what Publisher may suggest or advise or fail to suggest or advise with respect to the manuscript as submitted and shall apply to the final manuscript as it appears in corrected printer’s proofs and shall survive the termination of this Agreement.xxxii

ALTERNATIVE CLAUSE

16. INSURANCE:(a) Notwithstanding anything to the contrary in the Agreement, Publisher agrees to add Author as an insured to the Media Special Perils Program, Policy No. _________________, which Publisher currently carries with _________________ Insurance Company. A copy of the policy is attached and forms a part of this Agreement.As an insured, Author will be covered subject to the terms of the policy against

claims arising from the work for libel, invasion of the right of privacy, plagiarism, infringement of copyright, trademark infringement and unfair competition. (See the policy for a more detailed list of claims covered.) Coverage will be solely for the publication of the work by Publisher, or by its licensee, and will be subject to the limits of liability and the deductible provisions set forth in the policy.The policy’s limits of liability are [$5 million] for all occurrences in any policy year for all books published by Publisher or under license from Publisher.Author and Publisher, have the same coverage under the policy for the work. The coverage includes legal expenses as well as judgments. However, if Author elects to have separate counsel for any reason, the cost of such counsel must be borne by Author and the counsel must cooperate with the counsel engaged under the policy.Publisher will pay the premium for the coverage described herein.The deductible for each individual loss or claim is [$50,000.] It will be handled as follows: Publisher will pay the first [$1500] of all costs and expenses (including legal fees and disbursements) incurred in connection with any claims asserted which, if true, would constitute a breach by author of author’s representation and warranties in the agreement. Publisher and Author agree to bear any such additional costs or expenses above [$1500] constituting the balance of the deductible in the policy on a 50/50 basis. If there are costs and expenses in excess of the deductible, which for any reason are not paid by the insurance corporation, then those amounts will be handled in accordance with the terms of this Agreement, as if this modification had not been made.xxxiii

17. ASSIGNMENT OF ROYALTIES:(a) Author agrees to furnish Publisher with a copy of any assignment which Author may make of his rights to royalties under this Agreement, and to specify in writing to whom and where future royalty payments may be made. Such assignments shall not be binding on Publisher unless Author shall receive from Publisher written acknowledgement of receipt of a copy of such assignment. The performance of the terms of this Agreement are personal to Author and may not be assigned.xxxiv

(b) This Agreement may be assigned by Publisher as part of the sale or transfer of all or substantially all Publishers’ business or as part of the merger or consolidation of Publisher with another corporation. This Agreement may be assigned by Publisher to any corporate subsidiary or affiliate, or any company or entity owned or controlled by it.xxxv

18. RIGHT OF FIRST REFUSAL: Author grants Publisher the first refusal of his next completed book length work, on the same terms and conditions as are set forth herein, except that the amount of the advance and the royalties shall be subject to negotiation. Such negotiation shall not commence until four months after the publication of the present Work. If Author and Publisher cannot agree upon advance and royalties within thirty (30) days after the commencement of negotiations, Author shall then be free to negotiate with other publishers, provided that Publisher shall have the option to obtain the right to publish by matching terms which Author shall have obtained elsewhere. Author shall communicate such terms to Publisher in writing, and Publisher shall have ten (10) days after Publisher’s receipt of such

communication in which to exercise such option.xxxvi

19. PAYMENT TO AGENT: Publisher is authorized to pay all monies due Author to (name and address of Author’s agent) whose receipt shall be full and valid discharge of Publisher’s obligations.xxxvii

20. BINDING EFFECT: The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties, their respective successors, legal representatives, and assigns.

21. FORCE MAJEURE: This Agreement and performance thereof by Publisher shall in all respects be subject to delays or inability to perform all or any portion thereof by reasons of strikes, lockouts, market shortages of labor or materials, acts of God, accidents arising out of circumstances and conditions not directly due to negligence of Publisher, or which may affect Publisher’s suppliers, or subcontractors; and without limitation by reason of any of the foregoing, by reason of any cause, condition or circumstances beyond the control of Publisher, including but not limited to the intervention of any rules, law or regulation of any Government, or any bureau or department, or any sovereign act, and the term of this Agreement or any obligation of Publisher hereunder shall be extended by the period of such delay.

22. NON-COMPETITION: Author agrees that during the term of this Agreement it will not, without the written permission of Publisher, publish or permit to be published any material, in book or pamphlet form, based on material in the Work.

23. NOTIFICATION: Author agrees to notify Publisher promptly of the disposition of any right, which Author has retained for itself.

24. DISPOSAL OF MANUSCRIPT: Except for loss or damage due to its negligence, Publisher shall not be responsible for loss of or damage to any property of Author, and in the absence of written request from Author prior to publication for their return, Publisher, after publication of the Work, may dispose of the original manuscript and proofs.

25. NO WAIVER: A waiver of any breach of this Agreement or of any of the terms or conditions by either party, shall not be deemed a waiver or any repetition of such breach or any ways affect any other terms or conditions hereof; no waiver shall be valid or binding unless it shall be in writing and signed by the party making the waiver.

ADDITIONAL CLAUSES

26. CROSS-COLLATERALIZATION: Any sums due and owing from Author to Publisher, arising out of this or any other agreement, may be deducted from any sum due or to become due from Publisher or Author pursuant to this Agreement or any other agreement between the parties.xxxviii

27. BANKRUPTCY: If (a) a petition in bankruptcy is filed by Publisher, or (b) a petition in bankruptcy is filed against Publisher and such petition is finally sustained, or (c) a petition for arrangement is filed by Publisher or a petition for reorganization is filed by or against Publisher, and an order is entered directing the liquidation of Publisher as in bankruptcy, or (d) Publisher makes an assignment for the benefit of creditors, or (e) Publisher liquidates its business for any cause whatever, Author may terminate this agreement by written notice and thereupon all rights granted by him hereunder shall revert to him. Upon such termination, Author, at his option, may purchase the plates as provided in Clause 16 and the remaining copies at one-half of the manufacturing cost, exclusive of overhead. If he fails to exercise such option within sixty (60) days after the happening of any one of the events above referred to, the trustee, receiver, or assignee may destroy the plates and sell the copies remaining on hand, subject to the royalty provisions of Clause 10.xxxix

28. INFRINGEMENT: If the copyright in the Work is infringed, and if the parties proceed jointly, the expenses and recoveries, if any, shall be shared equally, and if they do not proceed jointly, either party shall have the right to prosecute such action, and such party shall bear the expenses thereof, and any recoveries shall belong to such party [or, any recoveries after the deduction of such expenses shall be divided between them.]

29. ARBITRATION: Any controversy arising under this Agreement shall be submitted to arbitration before the American Arbitration Association in accordance with its rules, and judgment confirming the arbitrator’s award may be entered in any court of competent jurisdiction.

30. LIFE INSURANCE: Publisher shall have the right to obtain life insurance coverage on Author’s life of up to five hundred thousand ($500,000.00) dollars, and Author shall cooperate with Publisher to the extent necessary to enable Publisher to obtain such coverage including submission to a physical examination if required by Publisher’s insurance carrier.

31. PUBLISHER’S EDITOR: It is understood and agreed that Author has entered into this agreement in reliance upon the representation that [name of editor] shall work with Author as the editor of this Work. If at any time [editor] leaves the employ of Publisher or ceases to act as editor of this Work without the consent of Author, then Author may terminate this agreement by giving 90 days notice of his intent to terminate. Within that 90-day period, Author shall repay all advances made under this agreement or arrange for a satisfactory method of repayment. Upon receipt of such sums or upon Publisher indicating in writing that it would accept a proposed method of repayment, all rights granted hereunder shall revert to Author.xl

32. NEW YORK LAW APPLIES: This Agreement shall be interpreted according to the laws of the State of New York, applicable to agreements made and to be performed

therein. This Agreement constitutes the complete understanding of the parties. No modification or waiver of any provision shall be valid unless in writing and signed by both parties.

33. PROMOTIONAL ACTIVITIES: The Author represents that (name of famous personality) has agreed that she will personally perform promotional and publicity activities for a period of two weeks at the time of hardcover publication and two weeks at the time of paperback publication of each Work. Schedules for such activities shall be mutually agreed upon by the Author and the Publisher. The Publisher shall be responsible for payment of the expense of the tour for (name of famous personality) and a companion including first class air fares and hotel expenses for travel outside (name of famous personality)’s area of residence, and for all meal and transportation expenses in connection with the tour. It is acknowledged that the Author’s promise that (name of famous personality) will personally perform the foregoing promotional and publicity activities has been a material inducement to the Publisher to enter into this Agreement and constitutes an essential part of the consideration provided the Publisher hereunder.xli

AUTHOR: PUBLISHERS:

_________________ _________________

(Name of author) (Publishing Company)

i It is extremely important to name the work to be published, and to describe accurately, even if briefly, what the “work” is (e.g., a non-fiction book relating to a specific subject matter, a novel concerning a certain historical period, etc.). The description is important because, if the author does not deliver the work and later takes a manuscript to a second publisher, the first publisher may still have a legal claim to the work if the book is the same as the one he originally contracted for. The author may have to repay the advance if the book is the same one previously rejected. Additionally, failure to describe the work can lead to serious disputes between the original parties. Finally when an author tries to sell a book to a publisher without sending a completed manuscript or sample chapters, he or she submits a proposal, which generally describes the scope of the work, who will be interviewed, what research will be done, and how the author expects to complete the project. The description of the work in the book contract, and the book proposal that led up to the contract, must be carefully scrutinized. The courts may not treat them as merely descriptive selling documents with no legal significance.

ii The first clause in a book-publishing contract is “the grant,” which specifies what basic rights are being granted by the author to the publisher. A trade book contract grants the publisher the rights to to print and sell the work itself, and the right to license other parties to print and sell the work (a mass-market paperback publisher, a British or foreign publisher) or to make other subsidiary uses of the book (dramatic rights, merchandising rights, filmstrips, computer uses).Every trade book contract makes provision for granting both direct rights to the publisher and giving it the power to license at least some of the subsidiary rights in the work. On the basis of the grant in this contract, the American publisher may print and sell its own edition of the work in either hard or soft-cover. Soft-cover rights, which may be the most valuable right relating to the work if the hardcover edition is a best-seller, fall into two categories:(1) A trade paperback, which generally looks exactly like the hardcover edition in terms of size and format but has a soft cover and is often published by the hard-cover publisher itself under its own imprint;(2) A mass-market paperback typically sold to an outside company which reprints the book generally in a rack size format.

When a license of soft-cover rights is sold, the publisher and the author split the price, usually in a 50-50 ratio, although a highly successful author may get a 60-40 split (or even higher, 65-35 or 70-30) or he may receive a “step-up” split, 50-50 below a certain amount (say $100,000) and 60-40 above it.Sometimes very large advances are paid to an author (six and seven figures) and the publisher insists on obtaining all soft-cover rights to a work, including mass-market rights, without any further split to the author until the advance is paid off. In that case, the royalty clause of the contract will specify what mass market royalty the author is credited with and when the advance is earned back, the author will continue to collect that royalty on each paperback book sold. The publisher may also insist on obtaining worldwide rights to the work to maximize its ability to recoup the large amount of money it is laying out. A typical clause in that situation would grant to the publisher “the sole and exclusive right to publish and sell the work or license or cause the same to be published in both hardcover and paperback form in the United States, its territories and dependencies, Canada, and the Philippine Republic and in all countries of the world.”

It is always important to break down the grant into its constituent parts so that all parties know exactly what rights are being conveyed. Other rights must be separately dealt with and negotiated:(1) Soft-cover rights;(2) British Commonwealth rights may also be valuable, depending on the appeal of the book to the English market. Here, the American hard-cover publisher acts only as an agent (although he may actually sell printed sheets of his own edition to the British publisher as well, thereby saving on production costs), and thus is entitled only to an agent’s commission, typically 15–20%.(3) Foreign translation rights may also be valuable, with the American publisher again acting only as an agent and obtaining 15–25% as its commission;(4) Other subsidiary rights are usually dealt with in other parts of the contract.

The term of the grant of rights in this contract is “during the full term of copyright and all renewals and extensions thereof, under the present and future laws of any country covered by this agreement.” The term of copyright is the author’s life plus fifty years regardless of the date of original publication. Thus any grant of rights made by the author would be effective for the full term of copyright, subject to the termination and recapture provisions of the new law, found in Section 203, for contracts executed after January 1, 1978 (termination permitted after 35 years), and Section 304, for works copyrighted before January 1, 1978 (termination permitted after 56 years). In short, the new law permits termination of a grant of rights by an author after a set term of years whether or not the author has died after a specified term has expired.

iii The advance is often the most important part of the contract to the author. It is the only money he or she may realize from the work for a long time, until the book is published and royalties begin to be earned. If an advance is paid before the book is even written, then the advance must sustain the author through the entire period of creation and beyond. The amount of the advance may become the most contentious part of the negotiation between author and publisher.There is no set method of determining the amount of the advance. An author may receive only $500 for a first book of poetry. On the other hand, a high government official with secrets to tell may obtain a $2,000,000 advance for all rights. A successful commercial novelist also may obtain a seven-figure advance.The amount of the advance is keyed to the rights conveyed. As explained above, if a hardcover publisher pays $1,000,000 to an author, it will expect that advance to cover soft-cover rights and foreign rights as well. In that case when those rights are sold to a third party, the hardcover publisher does not have to account to the author for his or her share until the amount of the advance is earned.An advance is not usually paid all at once. As in this contract, a lump sum is agreed upon as the advance, but it may be paid out in parcels; 1/4 on signing, 1/4 on submission of an acceptable portion of the manuscript, 1/4 on acceptance of the entire manuscript, and 1/4 on publication. Other splits are possible. A publisher will generally insist on such a split to give the author a good reason to deliver the manuscript promptly. (If all the money were paid in a lump sum at the beginning, an author would have little incentive to meet his or her deadlines.)A most important question for an author is whether he or she can be required to return any advance that has been paid. If the author delivers the book on time, and it is published, but the royalties do not earn out the advance, he or she does not have to return any portion of the unearned advance.Recently some publishers have inserted clauses that do require the Author to return any unearned advances. A typical clause to that effect is: “If the Author receives an overpayment of royalties because of copies sold but subsequently returned, the Publisher may deduct the amount of the overpayment from future sums to the Author under this agreement. If any such overpayment is not recouped in two accounting periods, the Author, upon request, shall pay the Publisher the unrecovered balance.” This effort to recover unearned advances has not gained favor among authors and their agents, who resist it strenuously.If the manuscript is late or is never delivered, a publisher generally has the right to demand the return of the entire advanceIf the book is a great success, either makes the best-seller list or is awarded a literary prize, many publishers are willing to award a bonus to the Author above and beyond the advance and the earned royalties. The last clause contains a provision allowing such a bonus.

iv The royalty provisions of the trade book contract are also of great importance to the author. However, a trade practice has been established in the industry that gives comparatively little room for negotiation. Thus, it has become almost standard for most hardcover publishers to grant a royalty of 10% of the retail price on the first 5,000 books sold, 12.5% on the next 5,000 books sold, and 15% thereafter (i.e., for all books sold over 10,000 copies). The percentage is based on the “retail price”—the cover price on the book regardless of the discount that the bookstore may give (except when the book is “remaindered” as explained below). Recently, many publishers have added a freight charge to the books that they sell to bookstores, which the stores add to the price of the book, but then the publishers deduct that freight pass-through charge when determining the author’s royalty. For example, if the cover price of a book is $15.00, the invoice price to the bookseller is really $14.50 and the extra.50 charged is considered the freight pass-through charge. The author will get 10% of the “invoice price,” i.e., $14.50 rather than 10% of $15.00. Thus, the definition of “retail price” really means “invoice price” to the bookseller and must take into account the added and then subtracted “freight pass-through” amount, usually around 50 cents.Some publishers insist on a straight 10% royalty for unknown authors, with no step-up after 5,000 or 10,000 copies are sold. A well-established author may get a straight 15% royalty from the first book sold. A true blockbuster author may get more than 15% at some higher step-up in sales (above 50,000 or 100,000).

v The alternative royalty clause makes clear that the author’s royalties must be computed on the basis of the retail price of the book as indicated in the catalogue, regardless of the actual price charged to the consumer and regardless of any freight-pass through charge, which the author has no way of controlling.

vi Publishers usually wish to reduce the royalties on small printings of the work. If only 2,000 copies of a book are reprinted, the cost of printing is higher than if the run were 5,000 or more. The publisher feels that the author should share the cost of small reprintings by reducing his or her share of the royalty. A provision to that effect is included in Subclause 3(a).

vii Many publishers make arrangements for simultaneous publication of the work in the United States and Canada through an affiliated Canadian publisher whose name appears on the copyright page. The work as printed in the United States is then shipped to Canada. Some publishers will pay the same royalties for copies sold in both Canada and the United States.

viii Book club sales can be made in two ways: a book club may buy a certain number of books (in which case Subclause (d) applies and the author gets 10% of the amount received by the publisher from the book club, if the discount is over 60%), or the book club buys a set of plates for the book and prints the work itself, paying the publisher a fee for the right to print the work for its members, in which case Subclause (g) applies.

ix Dealing with overstock books, hardcover books that remain unsold after the book has had its first run in the regular bookstores. A publisher may encourage bookstores to try to sell more copies of a book by giving the bookstore a special discount on the books remaining in stock, which then may not be returned. These increases of the bookstore discount for books “in place” may lead the bookstore to set a special price to consumers so that the books may be cleared out quickly. Obviously, if the publisher reduces its own return for the overstock books, it will insist that the author must share in the cost and therefore his or her royalty must be reduced as well.In addition to overstock books, publishers also insist on reduced royalties for “remaindered” books. (A book at the end of its run that may already have been shipped back to the publisher by bookstores because it is no longer selling. The publisher may also have stock of the book in its warehouse.) At that point, the publisher wants to sell all its stock in the book at a greatly reduced discount—over 60%—and get whatever it can for the remaining books. At that point, the royalty for the author is no longer a function of the cover price, but is based on the actual amounts received by the publisher. An author simply gets 5% of that amount.Sometimes an author may try to restrict the time within which a book may be remaindered (18 months from publication) to insure that his or her book may not be “dumped” before it has a chance to find an audience. But publishers generally try to keep the last word on when to remainder a book, since they feel that all marketing decisions belong to them.

x This clause deals with special sales at a greater than usual discount. A publisher may find that a special group is interested in buying many copies of a book to send to its members—a new book on medicine may be sold to a specialized doctors’ group. Or a wholesaler in a certain region may want to buy a large number of books about that area. There is no restriction on when such sales can be made. If a publisher sells at a 58% discount to a special group or a wholesaler, the author’s royalty is reduced by 1/2 the difference between 44% and 58% (1/2 of 14% or 7%). If the royalty rate is then 15%, the author’s royalty may be cut almost in half. Some authors are unpleasantly surprised to find their royalty payments reduced by a large number of such special sales. Publishers, however, insist that they have the right to market the books as they deem advisable, and it is in their interest to maximize their own profit as well. In addition, some sales must be made at a discount or they will not be made at all. It is extremely difficult to get a publisher to modify this clause.On the other hand, a publisher may be in legal difficulty if it decides on its own to increase its discount to regular bookstores above 48% with no cost or sales justification if this has the effect of reducing the author’s royalties.

xi (l)–(m) These clauses deal with paperback royalties. If a publisher has its own paperback line, it will pay royalties to the author on paperback sales just as it does for hardcover sales, but at a reduced rate. Trade paperback royalties are generally 1/2 of what the hardcover royalties may be, i.e., around 7 1/2%. Rack-size, mass-market paperback books may start out at a lower royalty (around 6%) but may have step-ups at 100,000 increments (i.e., up to 8% at 100,000 sales and even 10% at higher levels). The other subclauses dealing with paperback sales involve special sales programs that correspond to the special sales of hardcover books described above. If the publisher sells paperback rights outright to a different publisher, then the author and publisher split the amount, usually 50-50, as described in the commentary to Clause 4 infra.The royalty clause also contains a provision, in the second line of Clause 3, allowing the publisher to retain a “reserve for returns.” Hardcover books are sent to bookstores on consignment. If the books are not sold, they are returned to the publisher. In the meantime, the author may be sent a royalty statement in which the books sent to the bookstores are considered sold and he or she may receive a royalty on all the books shipped. In the next accounting period, a large number of the books sent out may be returned as unsold. At that point, the publisher may have overpaid the author, and there are not enough additional sales made in the new accounting period to recoup the overpayment. To

avoid this problem, the publisher wants the ability to set aside a certain amount of the royalty payable to the author to meet the contingency described. Thus, the contract allows him to hold back a reserve for returns and not pay it to the author.However, authors complain that the publisher may be keeping the author’s own money, which may earn interest for the publisher. They want to have a justification for any reserve and insist that the publisher prove that a particular reserve is necessary. The Author’s Guild, Inc., which tries to protect the rights of all authors vis-à-vis publishers, at one point suggested that the maximum that publishers retain as a reserve for returns be 15%. It later suggested a more flexible approach under which the publisher must justify any reserve based on a series of factors, including billings, reorders, actual returns, anticipated income from other sources and others. If the author considers the reserve too high, the Author’s Guild suggests that the matter should go to arbitration. The Author’s Guild also suggests that the author be told the exact amount of the reserve and how it was calculated. Generally, the publishing industry has not accepted the Guild recommendations in this regard.There are other problems connected with the “reserve against returns.” Typically a book publishing contract may provide that the publisher may set aside a “reserve against returns” to offset returns that may come back after the accounting period is closed, but there is no requirement that the publisher ever account for the final reserve. In theory, it may keep the reserve forever and never pay the author the reserve amount. An author should insist that the reserve be paid to him after some reasonable period. Thus if the publisher requires that all returns be made within one year of publication or of shipment, the publisher should know precisely what the returns of a book have been and therefore there is no longer any need to set aside any royalties for the author.

xii The publisher not only obtains rights that it exercises directly, but also obtains the right to license certain uses of the book to others—the so-called subsidiary rights. The most important such right is the right to sell “soft-cover” or “paperback” rights, which can be extremely valuable. Not every book published in hardcover will be licensed for paperback publication. For the most part, hardcover publishers lose money on their hardcover editions. Thus, they hope to recoup their losses by a lucrative, or at least profitable, paperback sale. In recent years, paperback rights have sold, on rare occasions, in the millions for highly successful works, and a six-figure sale is not unusual for a best-selling book.If the paperback rights are so important, can a successful author insist on retaining such rights for himself without splitting the proceeds with the hardcover publisher? It is extremely rare for even the most successful author to cut out his hardcover publisher from a share of paperback rights.Traditionally, the hardcover publisher and the author split the paperback sale 50-50. Recently successful authors have been getting higher percentages, 60-40, 65-35, or even 70-30 above a certain level. The hardcover publisher controls the rights and negotiates the sale. Some authors insist that they be consulted about any sale and their consent should be required, which would not be unreasonably withheld. But hardcover publishers generally demand that they have complete control over the disposition of such rights.The sale of paperback rights may take place in an “auction,” in which paperback publishers may bid against each other for the rights. It is obviously in the interest of the author and hardcover publisher to have such competition, since the price will generally be higher than if the hardcover publisher simply tried to sell the rights directly to a single company. In addition, there may be “escalators” that increase the amount paid for paperback rights if the book makes the best-seller list or is sold to a movie company.In recent years, successful authors have been able to get a higher percentage than 50-50 particularly if the price gets above a certain amount. Thus, the author may get 50% of the first $100,000 for paperback rights and 60% (or even higher) of the amount above $100,000; thus, if paperback sales were $300,000, the author would get a total of $170,000 (50% of $100,000 or $50,000 plus 60% of $200,000 or $120,000). The higher percentage may begin from the first book sold for a highly successful author.An author also has an interest in obtaining the amount paid for paperback rights as soon as possible. If the original publisher paid for both hard and soft-cover rights initially when the contract was signed, the author will not get any additional payments until the hard and soft-cover sales of his book have “earned out” the original advance paid. If the original publisher paid an advance only for hardcover rights and then sells the paperback rights, the author is entitled to his share of the paperback sale (less the amount of his original advance) in his next accounting period. To illustrate, if the original hardcover advance were $10,000, and the book were later sold to a paperback publisher for $50,000 before publication, the author would be entitled to an additional $15,000 (50% of $50,000 or $25,000 less the advance of $10,000 originally paid). However, the author has to wait until the publisher sends him his royalty statement showing how much he has earned in the six-month accounting period in which the paperback amount was received. Since the publisher ordinarily has three months from the end of an accounting period to actually send a check for the amounts owed, an author may have to wait as long as nine months from the time the hardcover publisher received the proceeds of a paperback sale before he gets the money. During this time, the money is earning

interest for the publisher.

xiii Some authors have insisted on a “pass-through” provision, under which any amounts received from a hardcover publisher for the sale of subsidiary rights (such as paperback rights or first serial rights, described below) go immediately (that is, within 30 days) to the author after receipt by the hardcover publisher. The advance would still have to be deducted.Another concern of authors in a paperback publishing contract is that no advertising should appear in a soft-cover edition of their work. Paperback publishers often advertise their other titles in their books or may sell advertising space to others. An author can usually insist on a provision that any paperback contract for his book prohibit any advertising without his consent.The other subsidiary rights in a hardcover publishing contract are not as sacrosanct as the paperback rights. A hardcover publisher does not insist on retaining first-serial rights (newspaper or magazine excerpts before the book is published) or dramatic rights (including movie or television sales) British Commonwealth, translation or foreign publication rights. These can be retained by the author. If an author has a representative such as an agent, or attorney the representative will feel competent to sell those rights and will want to keep the 10% or 15% commission. If an author does not have a representative who wants to do this, then the hardcover publisher can perform that function. Generally, the hardcover publisher will retain 10% for negotiating the sale of these rights. When a hardcover publisher sells foreign rights, he must engage a foreign agent to act for him in the foreign country. Thus the publisher’s share would go up to 20% or even 25%, with the author getting the rest.The other subsidiary rights listed in Clause 4 are generally retained by the hardcover publisher: book club rights, second-serial rights, excerpts, digests, anthology uses, and the many forms of storage, retrieved microfilm, or mechanical reproduction, retention and transmittal, including storage in information systems under the new computer technology. All these rights are generally shared 50- 50.As noted in the commentary below, electronic publishing has now become a major area of exploitation of textual material. Book publishers, authors and agents have had a difficult time trying to decide which electronic rights should be retained by the author and which rights should best be exploited by the hardcover publisher. Generally electronic rights which resemble dramatic rights are retained by the author. Electronic rights which resemble text rights are conveyed to the publisher.The trouble with this breakdown is that it is often not easy to determine on which side of the line a particular electronic use falls. If the verbatim text is simply recorded or transmitted so that the exact words of the book reappear on a computer screen, that would appear to fall on the text side, to be exploited by the publisher. But if the text is edited and an audio version is presented along with the text (to be read by one or more actors), does such a use resemble a dramatic version so that the author should retain the rights. Some CD-ROM presentations have both text and audio versions. Authors and publishers are struggling to allocate rights and define the proper line of responsibility. The alternative clause described in the text, tries to resolve the problem by allowing the book publisher to retain only those electronic rights “which serves as a substitute for sales of the work in book form.”The Author’s Guild suggests that if a hardcover publisher has not been able to arrange for a sale of subsidiary rights for a certain period of time, say five years, but the book is still in print in a hardcover edition, then the author should regain those rights and keep all the proceeds of any future sales himself. It also suggests that there should be a sliding scale by which the hardcover publisher’s share of subsidiary rights is reduced after a certain period of time even if licenses have been negotiated. These proposals have not been generally accepted in the industry.

xiv Electronic publishing has now become a major area of exploitation of text material. A hard cover publisher wants to be able to utilize this form or at least share in the proceeds from the licensing of electronic publishing rights. The author, on the other hand, may be concerned that the new electronic medium may dramatize the work, which might interfere with his or her valuable movie or television rights. It is certainly possible that in the future the same computer terminal might display the text of a work and simultaneously play an audio version on a CD-ROM disc and also broadcast a dramatic version of the same book through a television screen.

xv The publisher traditionally accounts to the author every six months. It not only sends a check for the amounts due, but also sends a royalty statement that shows how the amounts were computed. Thus, if 4,000 books were sold to regular book stores at the full rate, 350 were sold on a special sale, and 240 were sold by mail order, the royalty statement would show the total sales in each royalty category (by both books and dollar amount) and then compute the amounts due the author in each category. It will also list any subsidiary rights money that comes in.There is a long lag between the sale of a book and the time that the author gets his royalty on the sale. A book may be sold in January. The accounting period ends on June 30th, but the author does not get his or her check until the end

of October. The Author’s Guild has suggested that the publisher account more often to the author (three or four times a year) and send the amounts due 30 days after the end of the accounting period. But the publishing industry has generally kept to a six-month accounting period and has insisted on from 90 to 120 days after the period ends to send the amounts due.When a book is first published, the publisher may send thousands of books to bookstores that eventually are returned unsold. (As explained above, bookstores take books on consignment and may generally return all unsold books.) In the first accounting period, all the books sent to the bookstores are treated as if they were sold. Thus, an author will be paid a full royalty on those books. But when the returns come back in later accounting periods, the publisher may find that there is a negative balance and the author owes it some money. Therefore, a “reserve for returns” is established, to protect the publisher against this negative flow. The last clause allows the author to examine the books and records of the publisher to insure that the accounting was correct. Some publishers have imposed certain time limitations on the author’s audit rights and a clause to that effect is included. The Author’s Guild recommends that, if a discrepancy of more than 5% of the royalty is found, then the publisher should bear the cost of the accountant who did the examining. Some publishers will accept such a clause.

xvi One of the most important clauses in a publishing contract is the delivery clause (which must also be read with the rejection clause, Clause 8 infra). Authors must now deliver the Work in both hard copy and in electronic form, so that the process of manufacturing the book can be simplified. The publisher wants to insure that it gets the manuscript when it is promised so it can plan its publishing program for that season. An author, on the other hand, may run into difficulty completing his or her book, and does not want to be “punished” if the book is late.The clause in the text is favored by many publishers, since it specifies that the book must be delivered on a set date, and failure to deliver on that date is “just cause” for terminating the contract, thereby requiring the author to return all moneys advanced up to that time. Sometimes a contract may say that “time is of the essence,” which may also be interpreted as giving an author no leeway to be late. Under either type of clause, the author must deliver on time, or risk being in breach of the contract.If there is no such clause in the contract, the courts will require that a manuscript be delivered in a “reasonable time” after the due date, which may be extremely hard to define. Some publishers will give an author 60 to 90 days after the due date to deliver before any harsh sanctions can be imposed.One problem that often arises is an informal extension of the due date by an editor. An author may tell his or her editor that he will be six months late. The editor says, “Don’t worry. If it takes another year, we will be happy to take it.” No formal amendment of the contract is executed. When the six months are up and the manuscript is delivered, the editor may change his mind, or there is a new editor who refuses to live up to the extension. Most publishing contracts have a non-waiver clause, under which no waiver of any requirement in the contract shall be valid unless it is in writing and is signed by the other party. One solution for the author is to write the editor a simple letter setting forth the extension and ask him to acknowledge the change in due date. Or write a letter that will elicit a response from the editor in which the new date is laid out. As long as someone representing the publisher has set forth the new due date in writing and has signed the document, the non-waiver clause has been met. If the manuscript is late, but money is paid to the author after the due date of the book (as for example, a partial advance upon satisfactory completion of a portion of the book) the publisher’s signature on the check may be sufficient to show a waiver.The clause in question requires not only that a manuscript be delivered on time, but also it must be “in final revised form and content satisfactory to publisher.” The inclusion in the contract of a set number of words in the manuscript to be delivered to the publisher is extremely important. If the manuscript is supposed to be a minimum of 80,000 words, the author cannot deliver a manuscript of 25,000 words and expect it to be accepted.

xvii If the manuscript must be submitted for legal review, it is not officially “delivered” until after legal changes requested have been made. A clause to that effect is included here.

xviii Some publishers treat the warranty clause as an absolute guaranty that there is nothing in the work that can lead to liability on the part of the publisher. Thus even if the manuscript is read by the publisher’s attorney and changes are made to the manuscript in accordance with directions from the lawyer, the author may still liable for at least part of any judgment secured. Such a provision is questionable. The author relied upon the publisher’s lawyer’s skill and knowledge, and the author should not have to pay anything if the Publisher’s lawyer was wrong in his legal analysis. If the author refuses to make the necessary changes, then the contract is cancelled, and advances must be repaid.

xix Sometimes an author uses other copyrighted material in his manuscript, either quoting from another book or article or song, or using someone’s copyrighted photograph or work of art. It is generally the responsibility of the

author to obtain and pay for all permissions for use of this material. This clause embodies that requirement.

xx A key issue between author and publisher is what happens if the publisher does not like what the author has written. Most rejection clauses require that the publisher inform the author within a set period of time (60 days is standard) whether the book is acceptable or not. As long as there is no deception, bad faith, willful neglect, or estoppel because of previous encouragement, a publisher does not have to defend its literary judgment in the courts. It can simply reject a manuscript.

xxi Some publishers have accepted the obligation to make some effort to fix up the book for publication, although they are uncomfortable with the idea that they should have a legal obligation imposed on them. Often they will allow the author to keep a portion of the advance if the book is rejected, until he or she places it elsewhere. The advance that might be kept will generally be one-third of the advance.

xxii Under this clause, the publisher may make editorial changes in the text, a right that most authors would not agree to. In addition, authors fight fiercely for the right to put their own title on the work. Publishers usually accede to the author.

xxiii Publishers usually have the right to make minor editorial changes in the manuscript, to correct grammar, punctuation, capitalization and the like. This clause grants the publisher much broader power to change the text and delete material that it does not like. Publishers may insist on this type of clause in a highly controversial book where problems of libel or privacy are likely to arise. More typically, the publisher gives the author final say over the manuscript, but the contract then provides that the publisher does not have to publish.

xxiv The question of the publisher’s right to alter the author’s text has taken a new turn following United States ratification of the Berne Convention in October, 1988. (The Treaty went into effect on March 1, 1989). The Berne Convention specifically protects the author’s “moral right” (droite morale) over his work. Thus it is generally established in Berne Convention countries that a publisher may not alter, modify, or abridge an author’s work without his permission. Such modification would affect the “integrity” right of the author to present his work to the world as he wrote it, as well as his “paternity” right to have his name accurately associated with his work as he wrote it.

Thus, book publishers will be less likely to edit an author’s work or modify an artist’s reproductions without explicit permission. Contract provisions dealing with modification must be more specific, since without explicit permission, the courts are likely to expand greatly the author’s right to control his work exactly as he wrote it.If the work is edited by the publisher, it may be resubmitted to the author to ensure that he or she is satisfied. A clause to that effect is included here.

xxv Federal copyright protection begins from the moment the work is “fixed,” that is, written down, recorded or otherwise permanently set down. Most publishers will permit and assist the author to obtain formal copyright in his own name, rather than the publisher’s name. Since the author generally retains dramatic rights and other subsidiary rights in the work, his retention of formal copyright ownership may facilitate the subsequent conveyance of these other rights in the work. By the same token, both the legal and equitable owner of exclusive rights in the work may now sue for copyright infringement, so either the author or the publisher can sue even if copyrights in the name of the other. Thus, the publisher loses nothing (as far as infringement is concerned) even if copyright is in the name of the author.The 1978 Copyright Act also allows an author to regain all copyright and any rights he has conveyed after a set period of time has elapsed. Congress was concerned that a starving author with no bargaining position would sell all his rights to his creation for a pittance, and some publisher would reap all the benefits. (Indeed the creators of “Superman” did sell their rights for a very small sum.) Under the new law, an author can recapture all his rights in the five-year period following the thirty-fifth year after the execution of the grant.The copyright clause in a publishing contract should have a provision requiring the publisher to print a proper copyright notice in the name of the author “as a condition of this contract,” because the omission of notice from the book will be excused if such a condition is part of the publishing contract. There should also be a requirement that an application for registration, of copyright be made by the publisher in the name of the author within three months of publication of the book. This is desirable since registration, even after U.S. adherence to the Berne Convention, within three months will preserve various remedial rights—the ability to collect statutory damages and attorneys’

fees—under Section 412 of the Act if an infringement of the copyright occurs immediately after publication.The Berne Convention Implementation Act, which came into effect on March 1, 1989, altered the requirements of placing an appropriate copyright notice. The Berne Convention prohibits any formal requirements, such as notice or registration, before copyright protection can be secured. It was therefore necessary for the United States to eliminate the need for copyright notice as a requirement of securing copyright protection. Section 401 of the Copyright law was therefore amended in the following way: instead of stating that copyright notice “shall be placed upon” all publicly distributed copies of a work, that it “may be placed” on such copies. As an incentive to publishers to continue to use the notice system, the Act adds a new Subsection 401(d) that states: “if a notice of copyright in the form and position specified in this section appears on the published copy or copies to which a defendant in a copyright infringement suit has access, then no weight shall be given to such a defendant’s interposition of a defense based upon innocent infringement in mitigation of actual or statutory damages.”It is expected that publishers will continue to use a copyright notice system in the future, if only to take advantage of the “innocent infringer” provision cited above. However, the failure to place an appropriate notice on a work will no longer have the completely disastrous effect that it had under prior law.Clause 10 also allows the publisher to use the name of the author in any advertising and promotion of the book, eliminating a claim of invasion of privacy that arguably could otherwise be made by an author.

xxvi 11. This clause simply requires the publisher to publish within a specified time. After the manuscript is delivered and accepted, the author wants the book published as soon as possible. However, the process of preparing the book for publication, setting type and printing usually takes as long as having a baby—nine months. Thus, it is standard to give a publisher one year to actually publish the book in conjunction with Clause 12, this contract gives the publisher an additional six months by requiring the author to make a written demand that it be published after the year is up. If the publisher does nothing after another six months, the contract is ended and the author may both keep his advances and regain all rights to the work.It is also standard to separate hardcover and soft-cover publication by a year where the publisher has both rights, as in this case. The author usually has an interest in delaying the paperback edition as long as he can, so that the public will buy the higher priced hardcover edition. The publisher wants to get its soft-cover edition to the public as soon as it can, to take advantage of the publicity surrounding the publication of the hardcover edition. A year is the traditional compromise.

xxvii Often, a publisher will add a provision making clear that it has the sole, unqualified right to determine how many copies to print, what to charge for the book, what advertising and promotion to engage in, and generally how to sell the book.This clause has been interpreted by the courts as requiring “good faith” efforts by the publisher to publish, promote and sell the work. But it is not a best efforts clause, and the courts will not second-guess the publisher on any business decisions it may make on print runs or promotion or advertising budgets.

xxviii If the book is not published within the year specified, the author must make written demand upon the publisher that the book be published. If nothing is done within that time, then all rights will revert back to the author. Those are all the damages that the author may claim from the publisher.It has generally been thought that a publisher has no obligation to publish a work and that it cannot be required to do so. The only conceivable penalty was thought to be that the author could retain all advances and regain all publishing rights.

xxix Traditionally, the author gets ten free copies and can buy others at 40% off the cover price for personal use or as gifts. He may not resell them, however.

xxx The “out-of-print” clause is often a bone of contention between author and publisher. If the book is not selling after a period of time, the author will want to regain the rights and try to sell it elsewhere. On the other hand, the publisher does not want to give up the rights if there is any chance that the title can still be exploited.

xxxi In the clause in the text, a book cannot be considered out-of-print and therefore subject to reversion for the first five years after publication. (This clause is typical where a big advance has been paid.) Thereafter, if it is not in stock in stores, or the publisher’s warehouse, the publisher has an additional nine months to signify “his intention to publish a new edition.” There is nothing in the contract that says how long he actually has to print and publish that

new edition, however. A definite date of publication should be inserted to avoid unnecessary contention.Most publishers have a six-month out-of-print clause under which they must actually bring out a new edition six months after receiving proper notice from an author.Serious problems have arisen with respect to the out-of-print clause when the hardcover edition is out-of-print but a license for a paperback edition is still in effect. The last sentence of the clause states that a book cannot be considered out-of-print if it is “under contract for publication anywhere in the United States.” Another issue which has arisen under the out-of-print clause is the question of “books on demand.” Under the new electronic publishing system in effect in many publishing companies, a single book may be published and shipped upon demand by a bookstore. Instead of printing many hundreds of books and keeping them in a warehouse, a publisher may keep the book in electronic form in its computer and print copies as demanded. How does this new system comport with a contract provision that states that a book shall not be considered out-of-print “as long as it is available for sale either from stock, from Publisher’s warehouse, or in the field... .” It would appear that the out-of-print clause requires a commitment from the publisher that it will continue to expand funds by printing copies of the work, thus obligating it to actively promote and sell the work. That commitment will not be present if a single copy of a work can be printed when a request is made. On the other hand, the publisher can argue that so long as he can fulfill orders for the work, even a single copy, it has complied with the contract requirements. No definitive court decision has resolved the question.

xxxii The warranty clause may be the most difficult non-economic provision in a publishing contract. From the publisher’s point of view, the author must be prepared to stand behind his book and warrant that it does not libel anyone, violate anyone’s copyright, or invade anyone’s right to privacy. The publisher has no way of knowing whether the author stole the material from someone else or is trying to blacken an enemy’s name. The law does not recognize an innocent infringer, and the publisher is equally liable with the author for copyright infringement, libel or invasion of privacy even if it has no idea that there were such violations in the book. Thus, the publisher demands that the author warrant that he has the right to enter into the contract, that the book is original and not in the public domain, and that it violates no copyright or privacy right and libels no one, and further is not obscene. In addition, the author must agree to indemnify the publisher from any judgments, fines, costs and expenses—including attorneys’ fees—by reason of any “claim” or violation of the warranties.From the author’s point of view, he and the publisher are partners. The publisher has much more money than he does and stands to make more profit. Furthermore, the publisher is often as fully informed as the author about any legal problems that come up—the publisher will almost always have a book read for libel if there is a potential problem. And the publisher’s lawyers certainly know what the obscenity laws require. Suppose a totally bogus claim is made against the book that is easily defeated. Under the clause in the text, the author must pay all expenses, including the publisher’s expensive lawyer, even though the claim was not valid and even though the publisher should have been fully aware of the problem.As a possible compromise, some publishers will distinguish situations where a claim is sustained in the courts from one where a claim is made but is defeated before or after trial. In the latter case, the author and publisher share the expenses, including attorney’s fees, 50-50 (except for copyright claims where the author must pay everything). If a claim is made and is upheld in the courts, the author must pay all costs, expenses and judgments since indeed he has violated his warranty. (The Author’s Guild recommends that the author pay nothing if a claim is not finally sustained in the courts but few publishers will go that far.)Thus many agents or authors’ representatives will ask that the phrase “finally sustained” be inserted after the word “claim” as it appears in the warranty clause. This of course significantly changes the author’s liability under the contract. However, publishers are just as concerned with claims that are not “finally sustained” but are won in the courts (or settled), with significant legal expenses incurred. The publisher will insist that the author share some of those expenses even if the claim is finally rejected.What if the publisher wants to settle a case before it gets to the courts? Usually, it cannot settle and charge the author for the costs unless the author consents, but often there is a provision in the contract that the consent “must not be unreasonably withheld.”A related problem is what happens to the author’s royalties once a claim is made or suit is brought. As in the text, the publisher has the right to withhold royalties so it has some money put aside to satisfy its rights under the warranty clause. The author may want to insert a qualification so that only “reasonable” amounts due the author are withheld, rather than all royalties. Publishing contracts usually allow the publisher to stop payments from all contracts between the parties, not just the contract at issue.One of the problems for a practitioner in this area is whether a lawyer for the author or a publishing company can read the work for libel before it is published and then act as counsel if the book is later the object of a libel suit. The problem is that a lawyer who vets the book and clears it may find himself as a possible witness in subsequent court

proceedings. If a libel suit is brought at a later time, the author may seek to show that he or she did not “maliciously disregard the truth” in writing and publishing the book and did in fact seek legal advice before the work was disseminated. Any such explicit reliance on a lawyer’s advice may act as a waiver of the attorney-client privilege and may thus thrust the vetting lawyer as a witness into the litigation. It is in part for that reason that most large publishing houses have their own in-house lawyers read the work for libel and enlist outside counsel to defend any litigation.

xxxiii The problem of warranties and indemnities has taken an entirely different cast once publishers began to take out libel insurance to cover themselves and their authors. (Some publishers who can certainly afford the premiums have refused to take out insurance on policy grounds, stating that it tends to lower the guard of authors who must have an incentive to make sure that their books comply with the law). If a publisher takes out such a policy, a standard warranty and indemnity clause is still required, and the insurance clause merely supplements the existing warranties. This is necessary since the policy has certain limits of liability, and if those limits are reached, the pre-existing warranties and indemnities apply once again. In this day of skyrocketing insurance costs, publishers have cut back on their coverage and increased their deductibles on the policy, thus limiting the benefits of insurance for the author.In this policy, the deductible is $50,000 and generally the author and publisher must split that 50-50. However, the publisher picks up the first $1,500 of costs. This is of some benefit to the author since many trivial claims may be disposed of by the publisher’s counsel without the author being required to pay any counsel fees himself. If the total coverage of the publisher is eaten up by other claims involving other books, the author gets no benefit from the insurance policy at all, and his existing warranties and indemnities control.

xxxiv An author may assign his right to royalties to a third party, but this clause does not make it binding until the publisher acknowledges receipt of the assignment.Sometimes an author has a personal services corporation that he has established for tax reasons. If the contract is between the corporation and the publisher, the publisher usually requires the author to guarantee his corporation’s obligations under the contract.

xxxv In this age of mergers, consolidations and sale of assets, the publisher wants to be able to assign its rights to publishing contracts to any new corporate entity that succeeds to its business. It can also assign the contract to a corporate affiliate. What it cannot do is sell a publishing contract to another unrelated publisher as if it were a contract for grain futures.

xxxvi The option clause has fallen out of favor in recent years in the publishing industry, just as it has in baseball. Traditionally, the publisher wanted first crack at the author’s next book following the one that it agreed to publish under contract. The option clause would generally read that the publisher has the right to publish the author’s next work “on terms to be mutually agreed upon.” The problem with such a clause is that it is merely an agreement to agree, which is generally unenforceable under contract law. To avoid that problem, many publishers have converted the option clause into a right of refusal clause, so that the author may take the book elsewhere, but the original publisher has the right to match any competing offer. As long as the contract determines a method for ascertaining the final amount to be paid the author, the problem disappears.

xxxvii If an author has an agent, the agent will receive all the money due to the author from the publisher, deduct 10% (now up to 15% for some agent-lawyer-managers) and transmit the rest to the author. If there is a falling out between agent and author, the author would like to eliminate the agent and receive the money directly. Under the clause in the text, the author can at a later time tell the publisher to pay him rather than the agent.

xxxviii This clause allows the publisher to “cross-collateralize” amounts due the author from other publishing contracts. If an author has a highly successful work which continues to sell and then signs a new lucrative contract for a book that does not do well, the publisher can deduct amounts from the successful book to pay for unearned advances on the unsuccessful book if the clause allows deductions “from sums due the author under this or any other agreement between the parties.” Without the underlined words, the publisher must treat each contract separately. A practitioner should be aware of the importance of this clause, and make sure that the matter is properly discussed and negotiated.

xxxix This is a standard bankruptcy clause in most publishing contracts. It seems to allow an author to recapture the rights to his book as soon as a publisher files for bankruptcy. Unfortunately, it is the type of automatic transfer apparently prohibited by sections 365 and 541 of the Bankruptcy Law since it will adversely affect the rights of creditors. If the publishing contract is considered an executory contract (with additional obligations on the part of the publisher before the amounts due the author can be paid) there may be a way around the prohibition. Practitioners should not assume that this clause is enforceable as written and should be sure to check the relevant bankruptcy provisions.

xl Sometimes an author considers working with a particular editor as essential to his or her relationship with the publisher. Such an author can insist upon a “key man” that allows him to leave the publishing house if the editor leaves. Of course, the author must repay all amounts already received under the publishing contract.In reality, even without a “key man” clause, authors can and do leave a publisher with whom they have a contract and go to a new publisher when their editor leaves or for other reasons. The first publisher cannot get specific performance of a publishing contract, requiring the author to deliver the manuscript to it so that it may publish. This is true for two interrelated reasons: (1) a publishing contract is considered a personal services contract which cannot be specifically enforced; and (2) as the publisher has no obligation to publish the work if it chooses not to on a theory of “mutuality of obligations,” it should, therefore, not be able to require delivery of a manuscript which it has no obligation to publish upon receipt thereof.On the other hand, an author must repay the advances he or she has received. If the money is not repaid, theoretically the first publisher still has a contract to publish the work and, perhaps, can enjoin the author from taking it elsewhere until the amounts are paid. But if the author does make arrangements for repayment, rights must be reverted.

xli Clause 33 comes from the Joan Collins contract. It is frequently important for the publisher to obtain the services of the author, particularly a famous personality such as Ms. Collins, to promote and publicize the book. In this clause, the author agrees to set aside two weeks to travel around the country (generally to appear on television in local markets) to promote the work, with all expenses paid for her and a companion. In consideration of the high-figure advances paid to celebrities, a publisher wants to be sure that they are available for this important part of marketing the work, into which so much money has been invested.IN WITNESS WHEREOF, the parties have duly executed this Agreement the day and year first written above.