Lisa Adams' Post Redux
My agent, Faye Swetky, first sent the ArcheBooks contract to me on September 17, 2004. She wrote, and I quote: "The publisher doesn't pay advances per se, but they do offer $2,500 in stock warrants in lieu of cash that may be convertible down the road..."
Why this is problematic: The agent somehow came under the mistaken impression - as have many authors and probably their agents - that stock warrants are shares or their equivalent. As explained above, they are not.
2) AB's "Advance/Bonus" provision reads: "No cash advance against royalties is due per this contract, however, Publisher grants author a Bonus in lieu of advance in the form of 2,500 warrants for common stock per title of the series, or a total of 7,500 Warrants, per the terms or separate Warrant Grant letter (issued upon execution of contract), with a minimum guranteed net exercise value of $1.00 per share, thus a minimum guaranteed bonus value of $7,500."
Problem with this provision: It intentionally and deliberately misleads the signer. It actually creates the distinct impression one will receive $7,500, not PAY $7,500 to exercise Warrant "rights." Again, securities law 101, a stock warrant is an offer to the recipient to BUY shares in the company. They do NOT represent an ownership interest that exists already. It is also misleading because there was no SERIES contracted with me. It was one book. So, again, the terms are misleading and incorrect because the total figure should have been, $2,500 NOT $7,500. This tells me AB did not pay attention to the terms of MY contract. Additionally, I never received the proposed "Warrant Grant letter."
Royalties section, Provision F: "Royalty Statements: The Publisher SHALL provide a monthly Royalty Statements reflecting TOTAL recognized revenue sales of all works by the Author published by the Publisher for the prior month. Electronic royalty statements delivered via email SHALL be furnished monthly."
Problem with this provision: Tax law 101 "recognized revenue" means income that you actually receive. The dollar amount you see on a 1099-MISC or W2 is your personal "recognized revenue." What a recognized revenue sale is beyond me. I suppose it means when a book is actually SOLD, the publisher recognizes revenue and so should the author in the form of the royalty. Therefore, each time one of my books sold in any given month, I should have received a royalty statement.
Royalties section, Provision G: "Minimum Payment: If the total royalties due and payable are less than Fifty Dollars ($50.00), the Publisher may defer the rendering of payment until such regular payment date as at least said sum shall be due and payable to the Author."
This is the deferral discretion I mentioned above which, incidentally does NOT act to postpone issuance of royalty statements.