EX-10.7 3 exhibit10-7.htm AGREEMENT WITH DAVID HERSK & ASSOCIATES DATED JANUARY 11, 2005. Filed by Automated Filing Services Inc. (604) 609-0244 - Sound Revolution Inc. - Exhibit 10.7

Digital Music Distribution Agreement

1. Nature of Agreement. This Digital Music Distribution Agreement ("Agreement") and the attached Exhibit is entered into between David Hersk d.b.a. Hersk & Associates, with an address at 18 Western Terrace, Minneapolis, MN, 55426 USA Tel: 763 300 3718 Fax: 763 544 6336 "Customer" and Sound Revolution Recordings Inc. ("Sound Revolution"), a corporation with offices at located at 3955 Graveley Street, Suite 507, Burnaby, British Columbia, Canada, V6C 3T4 and describes the terms and conditions to which Sound Revolution shall perform digital music distribution services for Customer.

2. Reporting and Payments. In the event that more than $100 is owed to Customer by Sound Revolution for a calendar quarter, within thirty days of the end of the calendar quarter, Sound Revolution shall provide Customer with a written statement detailing the songs distributed and remit Customer's portion of the proceeds collected from the sales of Customer's music, net of Sound Revolution's distribution fees which include third party costs described in paragraph 7 below.

3. Licensed Sound Recordings. The music licensed under this agreement is all of the songs described in Exhibit "A" attached (the "Song Recordings").

4. Customer's Obligations. Customer shall deliver, at Sound Revolution’s cost, the following: 2 complete sets of DVD Masters of the Song Recordings in MP3 format ripped and genre labeled at 160 and 2 complete sets of audition masters of the Song Recordings in MP3 format ripped at 64 to Sound Revolution within 7 days of execution of this Agreement.

Customer represents and warrants on a continuing basis:
(a) that it owns or has secured all necessary rights to reproduce, distribute, transmit, sell, or otherwise exploit the Sound Recordings and the materials provided by Customer hereunder; (b) that it owns or has secured all rights necessary to allow Sound Revolution to perform the services hereunder (c) that it will comply with any obligations it may have under third party performance rights and distribution agreements; and that the Sound Recordings, music, and other audio content and materials provided by Customer hereunder do not violate or infringe any right of privacy or publicity, or contain any libelous, defamatory, obscene or unlawful material, or otherwise violate or infringe any other right of any person or entity (d) that the DVD containing Sound Recordings are of good quality. If, after receiving the first set of Sound Recordings, Sound Revolution determines that the Sound Recordings are not of sufficiently high quality to use in its website www.charitytunes.com, Sound Revolution has the option of not making the second payment installment. Customer must notify Sound Revolution in writing of any restrictions that may apply to the distribution, sales or promotions of Customer's encoded music, sound recordings, and other audio content, including any geographical restrictions. Customer shall also ensure that copyright information and other metadata included in Customer's encoded music, sound recordings, and other audio content and materials is accurate. Sound Revolution reserves the right to report mechanical and performance rights information to agencies that the Customer is under contract with, or to any person, firm, corporation or other entity with which Sound Revolution has a contract relating to such reports. Such right however, does not relieve any existing contractual reporting or financial obligations the Customer may directly have with such rights agencies or other third parties. Sound Revolution reserves the right to suspend or terminate services immediately if Sound Revolution has reasonable grounds to believe that Customer is utilizing services illegally or is in violation of any agreement with Sound Revolution.

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5. Digital Distribution. In connection with Sound Revolution's exercise of its rights and obligations hereunder, Customer grants Sound Revolution the non-exclusive rights, within the territory of the world, to: (a) perform the Sound Recordings publicly by means of digital audio transmission; (b) distribute the Sound Recordings and other materials provided by Customer; and (c) otherwise make such items available as specified herein. The foregoing license shall include but shall not be limited to, the right to provide and transmit such music and other content through web sites, in-store kiosks, portable music players, mobile phones, personal digital assistants, wireless applications and other Internet enabled devices. Customer shall retain the selection and termination rights set forth above. Any retailer to whom Sound Revolution makes Customer's content available shall have the right to include or exclude such content from such retailer's inventory, and retailers shall have the right to market, advertise, promote and establish retail prices and any discounts for Customer's encoded music and audio content.

6. Compilation CD sales. Customer also grants Sound Revolution the right to distribute CDs composed of the Sound Recordings, in a CD containing a selection of songs predetermined by Sound Revolution or as a customized compilation, or as a compilation of songs chosen by Sound Revolution. Customer grants Sound Revolution all synchronization rights and other rights necessary for Sound Revolution to make available for sale, produce and distribute CDs with a selection of songs predetermined by Customer, customized compilation CDs, and other compilation CDs containing the Sound Recordings. Customer grants Sound Revolution the rights to synchronize the Sound Recordings with any other materials in any combination in order to promote the sale of the Sound Recordings.

7. Distribution Fees. Sound Revolution shall choose the price to download the Sound Recordings. For digital distribution, Sound Revolution shall deduct the following: (a) transaction processing fees, such as credit card transaction fees and other electronic commerce processing, patent royalties or other fees, payable to or retained by unaffiliated third parties in connection with effecting a transaction or transmission, if any; (b) sales tax, if any; (c) returns and credits, including, but not limited to, those on account of defective merchandise, errors in billing, and errors in transmission, if any; (d) mechanical royalties, if any; (e) public performance fees, if any; (f) shipping, if any; (g) union, guild or other third party fees that may be required by contract or the Copyright Act, if any; (h) Internet advertising and promotion costs, such as banner ads on other web sites to promote the Sound Recordings, if any, provided that costs shall not exceed 10% of gross revenues; (i) fees or donations payable to charities or other non-profit organizations pursuant to marketing or promotion programs implemented by the Distributor to promote the sale of digital Recordings; (j) Internet referral fees, such as fees payable to any third party who, through their web site, email or other means, refers to us a purchaser of copy or phonorecord of a Recording, if any, provided that such costs shall not exceed 10% of gross revenues; (k) Charity fees paid to charities or non-profit organizations as a payment or donation selected by music purchasers and in no case shall be more than 12% of the retail price; and (l) a $0.05 server/e-commerce charge from each single download, and an additional $0.15 fee for each song where a hard copy CD is ordered; and the remainder of the purchase price shall be divided with 50% to Sound Revolution and 50% to the Customer.

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7.1 Advance. Sound Revolution shall pay to Customer a non-returnable advance, recoupable by Sound Revolution from royalties payable to Customer hereunder, the sum of $5,000, payable as follows:

  • $2,800 by certified cheque or money upon full execution of this Agreement; and
  • $2,200 by July 31, 2005.

7.2 Delivery Costs. The costs of producing the DVDs are included in the advance. Sound Revolution shall cover all actual third party delivery costs (Fedex).

8. Promotional & Test Trials. Customer acknowledges that from time to time new users on Sound Revolution will be given promotional credits or coupons. In no event shall Sound Revolution be liable to Customer for Sound Recordings that are distributed through Sound Revolution as part of this or any other promotion or test trial where no payment is received by Sound Revolution.

9. Subscription Services. Sound Revolution intends to include the Sound Recordings as part of genre based subscription services Sound Revolution intends to offer to its Internet consumers. Sound Revolution agrees that any songs for which Customer must pay royalties, those songs will be divided into 6 sets and will be released to subscribers one set a month on a 6 month cycle. In order to calculate revenues where Customer's Sound Recordings are included with music from other companies, the total revenues from a particular genre will be calculated and divided according to the prorated share of downloads from Customer's Sound Recordings.

10. Term of Agreement. This Agreement is a non-exclusive agreement. The initial term of this Agreement is six years. Either party may terminate this Agreement due to breach if such breach is not cured within thirty days of receipt of written notification. Upon termination of this Agreement, Sound Revolution shall return physical CDs and other materials used for encoding Customer's encoded music to Customer and disable all public links to Customer's encoded music.

11. Limitation of Liability and Disclaimer. IN NO EVENT SHALL SOUND REVOLUTION BE LIABLE FOR ANY LOSS OF DATA, LOSS OF PROFITS, COST OF COVER OR OTHER SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES ARISING FROM OR IN RELATION TO THIS AGREEMENT OR THE USE OF THE SERVICES, HOWEVER CAUSED AND REGARDLESS OF THEORY OF LIABILITY. SOUND REVOLUTION SPECIFICALLY DISCLAIMS ALL WARRANTIES EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THE SYSTEM OR SERVICES PROVIDED BY SOUND REVOLUTION HEREUNDER. Customer shall indemnify, defend, and hold Sound Revolution harmless from and against any and all claims, demands, suits, objections, actions and causes of action arising out of any breach by Customer of this Agreement, or any it the representations, warranties, indemnities, covenants or undertakings made by Customer hereunder.

12. Miscellaneous. This Agreement constitutes the entire agreement between the parties on the subject matter hereof. No amendment or modification hereof will be valid or binding upon the parties unless made in writing and signed by the duly authorized representatives of both parties. The relationship of the parties hereunder is that of independent contractors, and this Agreement will not be construed to imply that either party is the agent, employee, or joint venturer of the other. In the event that any provision of this Agreement is held to be unenforceable, this Agreement will

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continue in full force and effect without said provision and will be interpreted to reflect the original intent of the parties. This agreement shall be interpreted under the laws of the Province of British Columbia and both parties enure to the exclusive jurisdiction of the Province of British Columbia. This Agreement may be assigned by either party. Waiver by either party of a breach of any provision of this Agreement or the failure by either party to exercise any right hereunder will not operate or be construed as a waiver of any subsequent breach of that right or as a waiver of any other right. Except for the payment of fees hereunder, nonperformance of either party will be excused to the extent that performance is rendered impossible by strike, fire, flood, earthquake, power outages, network failure, governmental acts or orders or restrictions, or any other reason when failure to perform is beyond the reasonable control of the nonperforming party. All currency in this Agreement refers to US dollars.

Customer Acceptance. Customer has read and agrees to the terms and conditions of this Agreement and Exhibit.

CUSTOMER:
DAVID HERSK d.b.a HERSK AND ASSOCIATES

x /s/ David Hersk   
Signature   
  Jan 11, 2005 
David Hersk  Date 
Hersk & Associates   
 
Sound Revolution Recordings Inc.: 
 
x /s/ Penny Green  Jan 11, 2005 
Penny O. Green, Signing Officer  Date 

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Exhibit A

The Song Recordings hereunder shall include all 6,664 sound recordings contained in the song library which was sent as an attachment to an email sent from David Hersk to Penny Green on January 10, 2005 and which is described the Table of Contents of the music library listed below:

Table of Contents     
Children's     
                                 Disney Instrumental Favorites  33 
                                 Disney Vocal Favorites  43 
                                 Lullabies 
                                 Nursery Rhymes - Instrumental  26 
                                 Nursery Rhymes - Vocal  115 
                                 Sing-A-Long, Camping Songs  26  10 
                                 Songs of Faith  24  11 
                                 Songs Of Inspiration  199  12 
                                 Adventure Stories  17 
                                 Aesop's Fables  81  17 
                                 Cooking Courses  10  20 
                                 Fairy Tales  25  20 
                                 Interactive Role Playing  7  21 
                                 Totals  603   
 
Children's Alternative Versions     
                                 Lullabies  22 
                                 Nursery Rhymes - Instrumental  22 
                                 Nursery Rhymes - Vocal  95  22 
                                 Sing-A-Long, Camping Songs  25 
                                 Totals  106   
 
Classical Music     
                                 Bach  29  27 
                                 Beethoven  56  27 
                                 Berlioz  29 
                                 Bizet  28  29 
                                 Brahms  16  29 
                                 Chopin  16  30 
                                 Debussy  30 
Table of Contents 

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  # of Selections  Page# 
Classical Music     
                                 Dvorak 24 31
                                 Handel  49 31
                                 Haydn  8 32
                                 John Strauss  10 32
                                 Mendelssohn  14 33
                                 Mozart  18 33
                                 Ravel  8 33
                                 Schubert  11 34
                                 Tchaikovsky  12 34
                                 Verdi  12 34
                                 Vivaldi  29 35
                                 Wagner  5 35
                                 Totals  359  
 
Classical Vocals     
                                 Opera  52 36
                                 Virtuosos  75 37
                                 Totals  127  
 
Country     
                                 Dance Collections  37  40
                                 Totals  37   
 
Dance Music     
                                 Big Band  110  41
                                 Dance Collections  197  43
                                 Latino  235  48
                                 Polkas & Waltzes  247  54
                                 Totals  789   
 
Easy Listening     
                                 Candle Light Favorites  113  62
                                 Romantic Themes  303  65
                                 Sounds Of Nature  28  73
                                 Totals  444   
Table of Contents 

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  # of Selections  Page# 
Holiday Favorites     
                                 Christmas - Instrumental  752  74 
                                 Christmas - Vocal  422  94 
                                 Totals  1174   
 
Inspirational     
                                 Inspirational - Contemporary  262  105 
                                 Inspirational - Vocal  187  111 
                                 Totals  449   
Jazz     
                                 Original Recordings  135  117 
                                 Totals  135   
 
Rock & Pop     
                                 Alternative Rock  18  121 
                                 Electronic  34  121 
                                 Rap  26  122 
                                 Reggae  58  123 
                                 Rhythm & Blues  259  124 
                                 Symphonic Rock  118  131 
                                 Techno - Jungle  28  134 
                                 Tributes To - Instrumental  109  135 
                                 Tributes To - Vocal  301  141 
                                 Vintage Rock - Original Artists - New Recordings  297  148 
                                 Vintage Rock - Original Recordings  256  156 
                                 Vintage Rock - Sound Alikes  49  163 
                                 Totals  1553   
 
Specialty     
                                 Wedding Music  13  165 
                                 Wrestling Music  32  165 
                                 Totals  45   
 
Stage & Screen     
                                 Movie Themes  316  167 
                                 Stage & Screen Music  165  175 
                                 Totals  481   

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  # of Selections  Page# 
World Music     
                                 African  22  181 
                                 American  111  181 
                                 American Songwriters  38  184 
                                 Asia  11  185 
                                 Celtic  93  186 
                                 England  11  188 
                                 Folk Music  22  188 
                                 Gypsy Music  29  189 
                                 Hawaiian Melodies  14  190 
                                 Mediterranean  11  190 
                                 Totals  362   

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