Exhibit 10.1
PHONORECORD RELEASE
AND PROMOTIONS AGREEMENT
This Agreement is made and entered into effective as of this 15th day of
November, 2003 by and between Pyramid Records International, Inc., a Florida
corporation, with a principal place of business located at 11077 Biscayne
Boulevard, Suite 200, Miami, Florida, 33161, (hereinafter referred to as
"Company") and GSMB, LLC, a California limited liability company, c/o Michael J.
Cronen, Law Offices of Harris Zimmerman, located at 1330 Broadway, Suite 710,
Oakland, CA 94612-2506 (hereinafter referred to as "GSMB").
WHEREAS, GSMB co-sponsored a non-profit, cultural music exchange event in
Havana, Cuba, which took place from March 21 through March 29, 1999 (the
"Event"), which has been documented in various audio and audiovisual media,
pursuant to United States Department Of The Treasury License, including License
Nos. C-36173, CU-59857, CU64491 and CU-64491-a, as agent for selected
charity(ies); and
WHEREAS, GSMB owns copyrights, including without limitation, Copyright
Registration No. SRu-453-038 in and to certain pre-existing documentary sound
recordings (hereinafter referred to as the "Sound Recordings") and audiovisual
works (hereinafter referred to as the "Footage") made in connection with the
Event, including Sound Recordings and Footage documenting interviews and
original musical compositions performed by such artists as Mick Fleetwood,
Gladys Knight, Burt Bacharach and further artists ("Artists") as listed in
Exhibit A attached hereto and made a part hereof; and
WHEREAS, Company provides marketing, promotion and sales services in the field
of music and video recording, including radio and other promotions, record
production (manufacturing), distribution and sales; and
WHEREAS, Company and GSMB are desirous of obtaining agreement whereby Company
obtains marketing and sales rights, including promotion, documentary record and
DVD production (manufacturing), distribution and sales of phonorecords and DVD's
embodying the Sound Recordings and certain concert, interview, and scenery
Footage for the production of a DVD, as limited herein, it being understood that
GSMB is reserving the rights for the utilization of any or all of the Footage
and Sound Recordings in connection with a proposed feature film and/or the
future release of Sound Recordings of musical compositions that are not included
in phonorecords or DVDs released by Company under this Agreement;
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NOW, THEREFORE, in consideration of the provisions set forth herein, and for
other good and valuable consideration, the amount and sufficiency of which is
hereby acknowledged by the parties hereto, it is agreed as follows:
1. EXCLUSIVE RIGHTS TO SOUND RECORDINGS
GSMB hereby grants to Company, throughout the world and during the effective
term of this Agreement (life of copyright), subject to the terms of this
Agreement, all of which are conditions of such grant, an exclusive right to
reproduce the documentary Sound Recordings in phonorecords and to distribute
said phonorecords to the public, in any form now known or which becomes known in
the future, including but not limited to internet downloading. Said Sound
Recordings are presently titled "Building a Bridge to Havana", which may be
renamed by Company in its discretion. It is understood by the parties that GSMB
hereby grants to Company the right to post-produce and finish a documentary
music "DVD" that, once fully edited, will be sold in that format exclusively by
Company, which may include portions of the Footage as described in Paragraph 2
below. Nothing contained herein, however, shall prohibit GSMB from licensing the
same or similar Footage or Sound Recordings to a third party for use in
connection with a feature film. It is further understood and agreed between the
parties that GSMB shall also retain the right to license any Sound Recordings
that are not included in phonorecords or DVDs released by Company within seven
(7) years from the effective date of this Agreement.
2. NON-EXCLUSIVE DVD RIGHTS TO LIMITED FOOTAGE
It is understood that GSMB has been involved in negotiations with various film
production entities for the purposes of producing and publicly releasing a
documentary film using the Footage and synchronized Sound Recordings. Therefore,
GSMB's license of Footage to Company under this Agreement is limited to the
right to reproduce Footage of the Event in DVD format only in combination with
phonorecords of the Sound Recordings, and in connection with the promotion,
marketing and sale of the Sound Recordings and the promotion, marketing and sale
of the music DVD. Such Footage licensed to Company hereunder is limited to no
more than seventy (70) continuous minutes in total length, and to Footage
primarily of the Event concert held on Saturday, March 27, 1999 and Company's
selection of Footage of Event participant interviews, said interviews not to
exceed fifteen (15) minutes. Company has the right to edit the Footage for use
in DVD format and in marketing of said DVD and the Sound Recordings or both
together, subject to GSMB's prior written approval. Such written approval will
not be unreasonably withheld.
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3. TERM
This Agreement shall continue in full force and effect for the life of
GSMB's copyrights in the Sound Recordings and Footage unless this Agreement is
sooner terminated as herein provided.
4. DELIVERY COMMITMENT
GSMB shall deliver to Company commercially satisfactory master audio
recordings of the Sound Recordings and Footage free and clear of liens or other
financial encumbrances. Said delivered Footage shall comprise all of the footage
of the March 27, 1999 Event concert available to GSMB and approximately
seventy-five minutes (75) of interviews and scenery as mutually agreed upon by
the parties in writing, and which may include Footage and Sound Recordings
previously used in connection with the documentary film entitled Five Days In
March by Haskell Wexler, and that certain 22 minute promotional video previously
prepared by GSMB for marketing purposes. GSMB shall also deliver to Company
copies of all Songwriter/Artist Release[s] GSMB has obtained to date in
connection with the Artists' performances embodied in the Sound Recordings, a
list of persons who have signed said Songwriter/Artist Release[s] is attached
hereto and made a part hereof as Exhibit B.
5. RIGHTS
GSMB shall timely supply Company with information in the possession,
custody or control of GSMB that Company may reasonably request in order: (i) to
make payments due in connection with phonorecords embodying the Sound
Recordings; and (ii) to assist Company in obtaining final release approval from
Artists, their publishers, record companies, etc. for the public release of
Sound Recordings and DVD format Footage as provided for in this Agreement.
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6. APPROVAL OF GRANT OF RIGHTS
It is understood between the parties that the grant of rights by GSMB to
Company hereunder is made subject to approvals by the Artists, their publishers,
record companies, and any applicable regulations of the United States Department
of the Treasury, Office of Foreign Assets Control. As to publicity rights, as
set forth above, GSMB shall provide Company with the written Artists permissions
GSMB has received to date. Final artist, record company and governmental
approval for the reproduction and distribution of DVDs and phonorecords
embodying the Sound Recordings and Footage shall be Company's sole and exclusive
responsibility.
7. LICENSES FOR MUSICAL COMPOSITIONS
Mechanical royalty amounts, if any, for musical compositions embodied in
the Sound Recordings and reproduced and distributed in phonorecords shall be
determined between Company and the authors of such musical compositions or their
designated publishers and, as determined, will be paid by Company or its
alliance entity(ies) as identified in paragraph 8(B) below.
8. MARKETING AND PROMOTION EXPENSES
(A) Company shall diligently and in good faith apply its best efforts to
market, promote, manufacture, advertise and sell phonorecords embodying Sound
Recordings. Company shall make expenditures of at least four hundred thousand
United States Dollars (U.S. $400,000) to market, promote, advertise and sell
phonorecords embodying the Sound Recordings, excluding the costs of
manufacturing said phonorecords. Company's expenditures hereunder shall be in
substantial accordance with the Budget attached hereto as Exhibit C and shall
include expenditures of not more than fifteen thousand dollars ($15,000.00) for
expenses incurred for post-production of the documentary music DVD hereunder.
Said Budget shall include time lines for the marketing and promotion
expenditures. The cost of manufacturing phonorecords embodying Sound Recordings
hereunder shall be borne by Company or an alliance entity(ies) as identified in
paragraph 8(B) below. It is understood that a portion of the marketing and
promotion funds will be advanced by Company's distributor, not to exceed seventy
five thousand ($75,000) Dollars, which sum shall be in addition to Company's
expenditures of at least four hundred thousand United States Dollars (U.S.
$400,000) as set forth in this Paragraph 8(A).
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(B) It is a condition of this Agreement that Company has the financial
resources to expend and in fact expends all funds necessary to commercially
release, market and promote the distribution and sales of phonorecords and DVDs
embodying the Sound Recordings and/or Footage either through an alliance(s) with
major multi-national record company(ies) (Warners, BMG, EMI, Universal or Sony),
which alliance(s) shall be fully disclosed to GSMB, in writing, or by Company's
own expenditures in accordance with paragraph 8(A) above. In either event,
Company shall, deposit, within fifteen days of the effective date of this
Agreement, the sum of four hundred thousand United States Dollars (U.S.
$400,000.00) in an escrow account with a third party attorney mutually selected
by the parties and located in the State of Florida, said third party attorney
having errors and omissions insurance in an amount of not less than one million
five hundred thousand dollars ($1,500,000.00), to be controlled by the laws of
the State of Florida for attorney escrow accounts, to be held in trust by said
third party attorney with instructions for expenditures in accordance with
paragraph 8(A) above and the Budget attached hereto as Exhibit C. Said
instructions for expenditures shall be mutually agreed upon by the parties. It
is further understood and agreed that expenditures hereunder shall only be made
to entities that are unaffiliated with Company. Such unaffiliated entities
hereunder may include any entity in which Company and its principals and agents
have an ownership interest of less than ten percent (10%). Notwithstanding the
provisions of this Paragraph 8(B), however, it is understood and agreed between
the parties that Company shall have the right to expend sums in an amount not to
exceed ten thousand dollars ($10,000.00) to retain the services of Impact Music
Marketing, a promotional entity affiliated with Company and in which Company or
its principals and agents have an ownership interest of more than ten percent
(10%). In the event that Company enters into an alliance(s) with a major
multinational record company(ies) as provided in this Paragraph 8(B), then the
Company shall use is best efforts and request to enter into a written agreement
requiring the direct payment of Revenues by said alliance entity(ies) to GSMB in
accordance with the provisions of Paragraph 10 below. In the event it is
impossible to secure such direct payment to GSMB by Company's distributor, then
all revenue derived from the exploitation of the project shall be deposited in
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the above identified third party attorney escrow account, or such other account
as the parties may mutually agree, and each party shall be paid directly
therefrom in accordance with the terms of this Agreement. The various marketing
and promotional expenses incurred by Company under this Agreement shall be paid
by Company out of its promotional budget and these costs shall not be treated as
an advance against payments of Revenues to GSMB as agent for the selected
charity(ies) as set forth in this Agreement. It is specifically agreed and
understood that Company shall pay Company's distributor for such items as
special discounts, incentive programs and co-op advertising and that such
payments will be made as part of Company's expenditures of funds as provided for
in this Paragraph 8. It is expressly understood that Company's expenditures
hereunder shall not include payments for manufacturing CDs and DVDs embodying
the Sound Recordings or Footage.
9. GUARANTEED RELEASE AND PROMOTION/REVERSION OF RIGHTS
(A) Company agrees to commercially release for retail purchase in the
ordinary course of commerce, copies of a phonorecord album ("Album") embodying
Sound Recordings and DVD format Footage, within one hundred eighty (180) days
after GSMB's delivery of master recordings of the Sound Recordings and the
Footage to Company. Such Album shall include master recordings of at least ten
(10) musical compositions selected by Company from the musical compositions
included in the Sound Recordings.
(B) It is understood and agreed that if Company fails to commercially
release said Album as set forth in Paragraph 9(A) above, GSMB shall have the
right, following the expiration of said one hundred eighty (180) days, to
provide written notice that this Agreement shall terminate unless Company
performs its obligation to commercially release said Album. Company shall
thereafter have sixty (60) days to perform its obligation to commercially
release said Album. If Company fails to commercially release said Album within
sixty (60) days after such notice, this Agreement shall terminate. Upon
termination of the Agreement, all rights to the Sound Recordings and Footage
granted to Company hereunder shall automatically revert to GSMB. Company further
agrees to provide GSMB with copies of all documents and things in Company's
possession, custody or control that relate or pertain to the subject matter of
this Agreement and to return to GSMB any materials, including the Sound
Recordings and Footage, which GSMB delivers to Company hereunder, upon
termination of the Agreement.
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(C) Company reserves the right, at its election upon written notice to
GSMB, to suspend the operation of this Agreement for the duration of any of the
following contingencies, only if by reason of any such contingency Company is
materially hampered in the performance of its obligations under this Agreement
or its normal business operations are delayed or become impossible or
commercially impracticable: Acts of God, fire, catastrophe, labor disagreement
or action of any labor union or association affecting Company or the industry in
which it is engaged, delays in the delivery of materials and supplies. Any such
suspension due to a labor controversy shall be limited to a period of no more
than six (6) months.
10. JOINT REVENUE PARTICIPATION
(A) "Revenue(s)" as used in this Agreement shall include all fees,
commissions, payments of any sort, and any other form of consideration received
by or on behalf of Company in connection with the Sound Recordings and Footage,
from any source, including without limitation, Company's representatives,
agents, and affiliates, distributors or sub-distributors, throughout the world,
including but not limited to Ark 21, Universal, Broadcast revenue, Apple's I
Tunes and any other internet distributor. Revenues generated hereunder from the
exploitation of Sound Recordings and DVD format Footage, shall be allocated and
paid as follows: (i) ten percent (10%) of all Revenues shall be paid to a
charity(ies), preferably a music oriented charity(ies), to be selected jointly
by Company and GSMB (the deductions for the charity(ies) shall be shared equally
by the parties); and (ii) Revenues after said payments to charity(ies) shall be
shared equally by the parties with 50% of said remaining Revenues to be paid to
Company, and 50% of said remaining Revenues to be paid to GSMB to recoup its
costs. It is understood however, that a service fee of four percent (4%) of
Revenues generated from sales within the United States shall be paid to Company
before the allocation and payment of Revenues to the parties and the
charity(ies) as set forth herein. For example, if Revenues generated to Company
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from sales within the United States equal $100.00, allocation under this
Paragraph 10(A) is as follows: A $4.00 service fee shall be paid to Company;
$9.60 shall be paid to Charity(ies) as provided herein; $43.20 shall be paid to
Company; and $43.20 shall be paid to GSMB. It is further understood and agreed
that in the event the parties are not able to jointly agree upon the selection
of a charity(ies) hereunder, then GSMB shall have the right to select said
charity(ies) in its sole and exclusive discretion.
(B) The allocation of Revenues set forth in Paragraph 10(A) above shall
continue until GSMB recoups its costs. Once GSMB recoups its costs, Revenues
shall be shared equally by the parties with 50% of Revenues to be paid to
Company and 50% of Revenues to be received by GSMB as agent for charity(ies)
jointly by Company and GSMB. It is understood however, that a service fee of
four percent (4%) of Revenues generated hereunder from sales within the United
States shall be paid to Company before the allocation and payment of Revenues to
the parties as set forth herein. For example, if Revenues generated to Company
from sales within the United States equal $100.00, the allocation under this
Paragraph 10(B) is as follows: A $4.00 service fee shall be paid to Company;
$48.00 shall be paid to Company; and $48.00 shall be received by GSMB as agent
for charity(ies) as provided herein. It is further understood and agreed that in
the event the parties are not able to jointly agree upon the selection of
charity(ies) hereunder, then GSMB shall have the right to select said
charity(ies) in its sole and exclusive discretion.
(C) It is further understood and agreed that Company or its alliance
entity(ies) shall pay any mechanical royalty payments required to be paid by
virtue of any agreements reached between Company and the copyright proprietors
of the musical compositions selected to be included on the CD audio release
and/or the DVD format release. In the event that Company in fact makes any such
mechanical royalty payments to said copyright proprietors then such payments
shall be deducted from Revenues hereunder before allocation and payment to the
parties as provided herein. Company shall endeavor and request that the
copyright revenue, which would otherwise be payable to the songwriter and the
publisher, if any, be paid to the charity(ies) as provided for hereunder.
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(D) Company presently has an agreement with Ark 21 / Universal concerning
distribution of phonorecords embodying the Sound Recordings. A copy of this
distribution agreement is attached hereto as Exhibit D. Company shall instruct
Ark 21 / Universal to make any payments under said distribution agreement
directly to Company and GSMB. In the event that Ark 21 / Universal, or any other
distributor(s) or alliance entity(ies) selected by Company, do not agree to make
direct payments to the parties, then Company shall require that such payments be
made to the escrow account identified in paragraph 8(B) above to be distributed
and allocated to the parties in accordance with the terms of this Agreement.
(E) GSMB's share of Revenues hereunder shall be paid to GSMB by the third
party attorney as set forth in Paragraph 8(B) hereof in accordance with the
terms of this Agreement within ten (10) days after the close of each calendar
month. Company shall deliver to GSMB a statement of Revenue based activities
performed by Company under this Agreement within ten (10) days after the close
of each calendar month which shall contain such other information as GSMB may
reasonably require. It is understood and agreed between the parties, however,
that payments to Company and GSMB from Company's distributor(s) or alliance
entity(ies) may be withheld by said distributor(s) or alliance entity(ies) for a
period of approximately ninety (90) days. In the event that monies due from
Company are not paid, a late fee in the amount of six percent (6%) of the amount
due and unpaid shall be assessed against Company, and interest at the rate of
ten percent (10%) per annum shall be assessed on all amounts due and unpaid. It
is expressly understood that GSMB, by accepting interest on all unpaid amounts,
and late fees, does not waive any rights, powers or privileges under this
Agreement.
(F) Company shall keep at its principal place of business accurate and
complete records of all phonorecords embodying Sound Recordings and DVD format
Footage manufactured, leased, sold, used or otherwise delivered to other parties
by or on behalf of Company and of all details in connection with the aforesaid
activities necessary to enable Company to comply with this Agreement. Company
further agrees to provide GSMB with copies of all documents and things in
Company's possession, custody or control that relate or pertain to the subject
matter of this Agreement and to return to GSMB any materials, including the
Sound Recordings and Footage, which GSMB delivers to Company hereunder, upon
Company's commercial release of CDs and/or DVDs embodying the Sound Recordings
and Footage selected by Company.
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11. AUDIT
GSMB shall have the right, upon ten (10) days written notice and during
regular business hours, and at the expense of GSMB, to have an independent
auditor audit at the place of business of Company or other place agreeable to
the parties, the aforesaid records, and to report compliance or non-compliance
with the payment, record maintenance and all other reporting requirements of
this Agreement. If an audit shall reveal that in any six month period Company
has made an error of eight percent (8%) or more in its favor in any payment due
to GSMB, or designated charity(ies), Company shall bee obligated to pay the
audit fee in respect of such audits.
12. CREDITS
The parties agree to cooperate to provide appropriate written credits in
connection with the Sound Recordings and Footage embodied in phonorecords and
DVDs released by Company under this Agreement. It is further agreed that such
written credits shall include the following: 1.) Executive Producer: Joel
Geldermann; 2.) Producer: Todd Wood; 3.) Co-Producer: Jerry Merrill; 4.) Legal:
Steve Nelson, Mike Cronen.
13. WARRANTIES AND REPRESENTATIONS; INDEMNITIES
(A) GSMB warrants and represents that:
(i) To the best of GSMB's knowledge, information and belief,
and except as otherwise set forth in this Agreement, there are no encumbrances
to its performance of this Agreement;
(ii) GSMB shall fulfill its delivery obligations under this
Agreement in a timely manner; and
(iii) GSMB agrees to indemnify, save and hold Company harmless
from any and all loss and damage arising out of, connected with or as a result
of any breach by GSMB of any warranty, representation, agreement, undertaking or
covenant contained in this Paragraph 13.
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(B) Company warrants and represents that:
(i) To the best of Company's knowledge, information and
belief, and except as otherwise set forth in this Agreement, there are no
encumbrances to its performance of this Agreement;
(ii) Company shall fulfill its phonorecord release and
promotional obligations under this Agreement in a timely manner; and (iii)
Company agrees to indemnify, save and hold GSMB harmless from any and all loss
and damage arising out of, connected with or as a result of any breach by
Company of any warranty, representation, agreement, undertaking or covenant
contained in this Paragraph 13.
14. NOTICES
(A) Except as otherwise specifically provided herein, all notices
under this agreement shall be in writing and shall be given by courier or other
personal delivery, by overnight delivery by an established overnight delivery
service (e.g., Federal Express or United Parcel Service), or by registered or
certified mail (return receipt requested) at the addresses first written above,
or at a substitute address designated in a written notice sent by the party
concerned to the other party hereto.
(B) Each notice to Company shall be addressed to the attention of
Allen Jacobi, Pyramid Records International, Inc., 11077 Biscayne Boulevard,
Suite 200, Miami, Florida, 33161. Notices shall be deemed given when mailed or
deposited into the custody of an overnight delivery service for overnight
delivery, or, if personally delivered, except that a notice of change of address
shall be effective when in writing and only from the date of its receipt.
(C) Each notice to GSMB shall be addressed c/o Michael J. Cronen,
Law Offices of Harris Zimmerman, located at 1330 Broadway, Suite 710, Oakland CA
94612-2506. Notices shall be deemed given when mailed or deposited into the
custody of an overnight delivery service for overnight delivery, or, if
personally delivered, when so delivered, except that a notice of change of
address shall be effective when in writing and only from the date of its
receipt.
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15. SOUND RECORDINGS AND FOOTAGE/MUSICAL COMPOSITIONS
It shall be Company's obligation to make all necessary and/or required
payments to the copyright proprietors of the musical works embodied in the Sound
Recordings and Footage. GSMB will provide Company with documents in the
possession, custody or control of GSMB to assist Company in entering into any
licenses with said copyright proprietors.
16. ASSIGNMENT
GSMB shall have the right without Company's consent to assign this
Agreement in whole or in part. Company shall not have the right to assign this
Agreement or any of Company's rights or obligations hereunder in whole or in
part without GSMB's prior written consent, except in the case where a third
party acquires at least forty nine (49%) percent of the ownership of Company and
does not alter management or distributor.
17. ENTIRE UNDERSTANDING
This Agreement constitutes the entire understanding of the parties
concerning the subject matter hereof and revokes and supersedes all prior
agreements between the parties. This Agreement shall not be modified or amended
except in writing signed by the party to be charged with any such modification
or amendment.
18. RELATIONSHIP OF THE PARTIES
The parties hereto are independent contractors and nothing herein shall be
construed as creating a partnership or joint venture between them. Neither party
shall have the power to obligate or bind the other except as otherwise agreed
upon in writing.
19. AGREEMENT BINDING ON SUCCESSORS
The provisions of this Agreement shall bind and shall inure to the benefit
of the parties hereto, their heirs, administrators, successors, and assigns.
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20. WAIVER
No waiver by either party of any breach of this Agreement shall be deemed
a waiver by such party of any other breach of this Agreement.
21. SEVERABILITY
Should any provision of this agreement be adjudicated by a court of
competent jurisdiction as void, invalid or inoperative, such decision shall not
affect any other provision hereof, and the remainder of this agreement shall be
effective as though such void, invalid or inoperative provision had not been
contained herein. All accountings and payments required herein, all recoupments
permitted herein, and all grants and all warranties made herein, shall survive
and continue beyond the expiration or earlier termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement on the day
and year first above written.
GSMB, LLC
By: /s/ Joel F. Geldermann
----------------------
Joel F. Geldermann
Its: Manager
PYRAMID RECORDS
INTERNATIONAL, INC,
a Florida corporation
By: /s/ Allen Jacobi
---------------------
Allen Jacobi
Its: President
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