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EXHIBIT 10.4
TO
XXXXXXX.XXX CORPORATION
FORM SB-2
"[*]" = confidential information omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment.
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EXHIBIT 10.4
MUSIC CONVERSION AGREEMENT
This Agreement is made as of April 1, 1998 (the "Effective Date") by and between
Sunhawk Corporation, a Washington corporation with offices at 000 Xxxxxx Xxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000 XXX and International Music Engraving
Company, with its principal place of business at #7 Xxxx Xxxx, Xxxxxx Xxxx,
0000, Xxxxxxxxxxx ("IMEC").
RECITALS
A. IMEC wishes to convert sheet music into Sunhawk's proprietary Solero(TM)
file format.
B. Sunhawk wishes to retain IMEC to convert sheet music into Sunhawk's
proprietary Solero file format.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements set forth herein, Sunhawk and IMEC agrees as follows:
Section 1
DEFINITIONS
1.1 Music title. "Music Title" means a specific printed music
composition which may consist of one or more pages.
1.2 Source File. "Source File" (also called "Work Space") means a
single page of music in digital form which has been prepared by Sunhawk by
scanning the Music title and converting it into a format which can be used by
the Solero Editor.
1.3 Source Materials. "Source Materials" means any copies of Music
Titles in original sheet music form, notes, audio recordings, or other source
materials which Sunhawk may provide IMEC concerning the Music Title.
1.4 Specifications. "Specifications" for the Final file shall be as
set forth in Schedule "A" of this Agreement.
1.5 Solero Editor. "Solero Editor means the music editor software
provided to IMEC for use in preparing the Final Files as well as any templates,
editing tools, documentation, instruction files, instruction manuals, and any
other files, programs or other materials provided by Sunhawk for use in
converting the Source Files into Final Files.
1.6 Working Materials. "Working Materials" means the working file
which is prepared by IMEC from the Source File using the Solero Editor in
accordance with the Specifications. "Working Materials" also includes any
materials, inventions, documentation, original works of authorship, programs,
files or other materials which IMEC develops or creates which arises from or is
otherwise related to the Solero Editor, Source files, Source Materials,
Specifications or any other information or materials provided to IMEC under this
Agreement.
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[*] Confidential Treatment Requested
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1.7 Final File. "Final File" means the file which is prepared by IMEC from
the Source File(s) using the Solero Editor which IMEC believes in good faith to
conform in all respects to the Specifications. A Final File will contain one or
more Pages.
1.8 Page. "Page" means a page of music in a Final File which is considered
by the Solero Editor software as a full page of music.
1.9 Delivery and Payment Schedule. "Delivery Schedule" shall be as set
forth in Schedule "B" to this Agreement which lists the Pages contracted for and
the deadlines for their delivery. "Payment Schedule" shall be as also set forth
in Schedule "B".
SECTION 2
CONVERSION AND DELIVERY OF DELIVERABLES
2.1 Conversion, Progress Reports. IMEC shall, using its best efforts,
convert the Source Files into Final Files in accordance with the Specifications.
IMEC acknowledges that it has reviewed said Specifications and that it agrees to
prepare Final Files in accordance to the quality standards described and
exemplified by the Specifications. ALL CONVERSION WORK WILL BE PERFORMED BY IMEC
OR ITS EMPLOYEES AT IMEC'S OFFICES. IMEC AGREES THAT NO CONVERSION WORK SHALL BE
PERFORMED BY INDEPENDENT CONTRACTORS WITHOUT THE EXPRESS WRITTEN APPROVAL OF
SUNHAWK. Upon Sunhawk's request, IMEC shall report on the status of the
conversion of Source Files and any problems encountered relating to conversion
of the Source Files. In addition, IMEC shall contact Sunhawk's representative
promptly by telephone or email upon discovery of any event or problem that will
materially delay conversion work, and thereafter, if requested, promptly confirm
such report in writing. While Sunhawk agrees to provide reasonable technical
support for the Solero Editor, IMEC acknowledges that it is its responsibility
to become proficient in the use of the Solero Editor. The use of the Solero
Editor software is subject to IMEC's acceptance of the terms and conditions of
the separate "Combined Solero Editor and Viewer License Agreement."
2.2 Staffing. IMEC agrees to maintain a staff of qualified employees large
enough to prepare the Pages on the dates set forth in the Delivery Schedule.
Schedule "C" contains a list of the qualifications which qualified staff
typically have.
2.3 Delivery. IMEC shall deliver Pages within the times specified in the
Delivery Schedule. Failure to deliver Pages on the dates set forth in the
Delivery Schedule shall be deemed a material breach of this Agreement.
2.4 Delivery of Source Materials. Upon request by Sunhawk, IMEC shall
either deliver to Sunhawk, or destroy, all corresponding Source Files and Source
Materials.
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SECTION 3
TESTING AND ACCEPTANCE; EFFECT OF REJECTION
3.1 Testing and Acceptance Procedure. All Final Files shall be thoroughly
reviewed by IMEC and all necessary corrections as a result of such review shall
be made prior to delivery to Sunhawk. Upon receipt of a Deliverable, Sunhawk
will, in its sole discretion either: i) accept the Final File and make the
payment set forth in Schedule "B"; or, ii) provide IMEC with written notice of
the aspects in which the Final File contains errors or does not conform to the
Specifications and request that IMEC correct said Final File.
SECTION 4
OTHER OBLIGATIONS OF IMEC
4.1 Product Quality. IMEC agrees that the Final Files will be of high
quality and will conform in all respects to the Specifications. IMEC agrees to
fix at its own expense any errors which may be discovered in any Final File for
a period of one year after the date of acceptance of the Final File by Sunhawk.
IMEC further agrees to inform Sunhawk promptly of any known errors in the Final
Files.
SECTION 5
PROPRIETARY RIGHTS
5.1 Property Rights. IMEC acknowledges and agrees that the Solero Editor,
Source Files, Source Materials, Working Materials, and Final Files, including
but not limited to all source and object code, audiovisual effects associated
therewith are the property of Sunhawk (collectively "Proprietary Materials").
Title to all property rights including but not limited to copyrights, patents
and trade secrets in all of the Proprietary Materials shall remain with
Sunhawk. Except as expressly provided in this Agreement in order for IMEC to
convert the Source Files into Final Files, no license or other rights in the
Proprietary Materials is granted hereby.
5.2 Assignment of Rights. IMEC agrees to transfer and assign, and hereby
transfers and assigns to Sunhawk its entire right, title and interest, if any,
including without limitation all copyright ownership therein, no matter when
acquired, in the Working Materials and Final Files, and IMEC agrees to
cooperate with Sunhawk in perfecting any such assignment of rights. During and
after this Contract, IMEC will assist Sunhawk in every reasonable way, at
Sunhawk's expense, to establish original ownership of all such Working
Materials and Final Files on the part of Sunhawk and secure, maintain and
defend for Sunhawk's benefit all copyrights, patent rights, mask work rights,
trade secret rights and other proprietary rights in and to the Working
Materials and Final Files. IMEC agrees that it shall obtain no "moral",
license, or other rights in the Final Files, Working Materials or other
Proprietary Materials.
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SECTION 6
CONFIDENTIALITY
6.1 Confidential Information. The terms of this Agreement, Source
Files, Solero Editor, Source Materials, Working Materials, and Final Files, and
any other source code, computer program listings, techniques, algorithms and
processes and technical and marketing plans or other sensitive business
information, including all materials containing said information, which are
supplied by the Sunhawk to IMEC or developed by IMEC in the course of
conversion is the confidential information ("Confidential Information") of
Sunhawk.
6.2 Restrictions on Use. IMEC agrees that except as authorized in
writing by Sunhawk: (i) IMEC will preserve and protect the confidentiality of
all Confidential Information; (ii) IMEC will not disclose to any third party,
the existence, source, content or substance of the Confidential Information or
make copies of Confidential Information; (iii) IMEC will not deliver
Confidential Information to any third party, or permit the Confidential
Information to be removed from IMEC's premises; (iv) IMEC will not use
Confidential Information in any way other than to develop the Final Files as
provided in this Agreement; (v) IMEC will not disclose, use or copy any third
party information or materials received in confidence by IMEC for purposes of
work performed under this Agreement; and (vi) IMEC shall require that each of
its employees who work on or have access to the materials which are the subject
of this Agreement sign a suitable confidentiality and work-for-hire/assignment
agreement and be advised of the confidentiality and other applicable provisions
of this Agreement.
6.3 Limitations. Information shall not be considered to be
Confidential Information if it (i) is already or otherwise becomes publicly
known through no act of IMEC; or (ii) is authorized in writing by Sunhawk to be
disclosed, copied or used.
6.4 Return of Source Materials. Upon Sunhawk's acceptance of a
Final File for a Music Title, IMEC shall provide Sunhawk with all copies and
originals of the Source File, Source Materials, Working Materials and Final
File for the Music Title. Not later than seven (7) days after the termination
of this Agreement for any reason, or if sooner requested by Sunhawk, IMEC will
return to Sunhawk all originals and copies of the Proprietary Materials and
Confidential Information, as well as any other materials provided to IMEC, or
created by IMEC under this Agreement.
6.5 Third Party Confidential Information. IMEC acknowledges that
its association with Sunhawk is in no way conditioned or based upon its
knowledge or disclosure to Sunhawk of confidential information or trade secrets
of others, and agrees that IMEC will not disclose to Sunhawk or induce Sunhawk
to use any confidential information or trade secrets belonging to any third
party.
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SECTION 7
WARRANTIES, COVENANTS AND INDEMNIFICATION
7.1 Warranties and Covenants of IMEC. IMEC represents, warrants and
covenants to Sunhawk the following:
(a) IMEC has the full power to enter into this Agreement and perform the
services provided for herein, and that such ability is not limited or restricted
by any agreements or understandings between IMEC and other persons or companies;
(b) Any information or materials developed for, or any advice provided to
Sunhawk, shall not rely or in any way be based upon confidential or proprietary
information or trade secrets obtained or derived by IMEC from sources other than
Sunhawk.
(c) The conversion and other work performed by IMEC under this Agreement
shall be in compliance with the Specifications.
7.2 IMEC's Indemnity. IMEC agrees to indemnify, hold harmless and defend
Sunhawk from all claims, defense costs (including reasonable attorneys' fees),
judgments and other expenses arising out of or on account of the conversion work
which it performs under this Agreement, including without limitation claims of
the breach of any covenant or warranty set forth in Section 7.1 above.
7.3 Conditions to Indemnity. IMEC's obligation to indemnify is
conditioned on Sunhawk's notifying IMEC promptly of any claim as to which
indemnification will be sought and providing IMEC reasonable cooperation in the
defense and settlement thereof.
7.4 Sunhawk's Indemnification. Sunhawk agrees to indemnify, hold harmless
and defend IMEC from all claims, defense costs (including reasonable attorneys'
fees), judgments and other expenses arising out of the breach of the following
Covenants and Warranties:
(a) Sunhawk possesses full power and authority to enter into this
Agreement and to fulfill its obligations hereunder.
(b) The performance of the terms of this Agreement and of Sunhawk's
obligations hereunder shall not breach any separate agreement by which Sunhawk
is bound.
7.5 Conditions to Indemnity. Sunhawk's obligation to indemnify is
conditioned on IMEC's notifying Sunhawk promptly of any claim as to which
indemnification will be sought and providing Sunhawk reasonable cooperation in
the defense and settlement thereof.
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SECTION 8
CONVERSION FEES
8.1 Payments. Sunhawk shall pay IMEC according to the payment schedule
set forth in Schedule "B" upon Sunhawk's acceptance of each Final File.
"Acceptance" shall mean the decision, made in Sunhawk's sole discretion, that
the Final File conforms to the Specifications. Payment will be based on the
number of Pages accepted by Sunhawk. No conversion fee shall be payable on
Pages which are conversions of title pages. Since a Page may be larger or
smaller than the original printed Music Title page, fees are payable on the
number of Pages accepted, and not on the number of pages in the original
printed Music Title.
8.2 Compliance with Laws. Any and all amounts payable to IMEC hereunder
shall be subject to all laws and regulations now or hereafter in existence
requiring the deduction or withholding of payment for income or other taxes
payable by or assessable against IMEC. Sunhawk shall have the right to make
such deductions and withholdings and the payment thereof to the governmental
agency concerned, and IMEC agrees that it shall make and prosecute any claims
which it may have with respect thereto directly with the governmental agency
having jurisdiction over any such matter.
SECTION 9
TERMINATION
9.1 Termination for Non-Performance or Delay. In the event of a
termination of this Agreement by Sunhawk because of IMEC's material breach of
this Agreement, Sunhawk will have no further obligations or liabilities under
this Agreement. Sunhawk will have the right, in addition to all of its other
rights, to require that IMEC deliver to Sunhawk all of IMEC's work in progress,
including all originals and copies thereof, as well as any other materials
provided to IMEC, or created by IMEC under this Agreement. Payment of any
Delivery Schedule milestones under Schedule "B" which have been met shall be
deemed payment in full for all obligations of Sunhawk under this Agreement,
including full payment for all Working Materials, Final Files and all other
materials and work relating to the portion of this Agreement which has been
completed as of the time of termination.
SECTION 10
GOVERNING LAW; JURISDICTION AND VENUE
Governing Law; Venue. The validity, construction, and performance of this
Agreement shall be governed by the laws of the state of Washington without
respects to conflicts of laws, and all claims and/or lawsuits in connection
with agreement must be brought in Seattle, Washington. IMEC consents to the
personal and exclusive jurisdiction and venue of the state and federal courts
located in Seattle, Washington.
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SECTION 11
MISCELLANEOUS PROVISIONS
11.1 Notices. For purposes of all notices required or permitted to be
given hereunder, the addresses of the parties hereto shall be as indicated
below. All notices shall be in writing and shall be deemed to have been duly
given if sent by facsimile, the receipt of which is confirmed by return
facsimile or email, or sent by first class registered or certified mail or
equivalent, return receipt requested, addressed to the Parties at their
addresses set forth below:
If to IMEC: Xx. Xxx Xxxx Xxx
International Music Engraving Company
#7 Xxxx Xxxx
Xxxxxx Xxxx 0000
Xxxxxxxxxxx
If to Sunhawk: Sunhawk Corporation
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, XX 00000-0000 XXX
Attn: General Counsel
11.2 Designated Person to Send and Receive Material. The Parties agree
that all materials exchanged between the parties for formal approval shall be
communicated between single designated persons, or a single alternate designated
person for each Party. Each Party shall have the right to change its Designated
Persons from time to time and to so notify the other.
11.3 Entire Agreement. Except for the Combined Solero Editor and Viewer
Agreement, this Agreement, including the attached Schedules which are
incorporated herein by reference as though fully set out, contains the entire
understanding and agreement of the Parties with respect to the subject matter
contained herein, supersedes all prior oral or written understandings and
agreements relating thereto except as expressly otherwise provided, and may not
be altered, modified or waived in whole or in part, except in writing, signed
by duly authorized representatives of the Parties.
11.4 Force Majeure. Neither Party shall be held responsible for damages
caused by any delay or default due to any contingency beyond its control
preventing or interfering with performance hereunder.
11.5 Severability. If any provision of this Agreement shall be held by a
court of competent jurisdiction to be contrary to any law, the remaining
provisions shall remain in full force and effect as if said provision never
existed.
11.6 Contract Assignment. This Agreement is personal to IMEC. IMEC may not
sell, transfer, sublicense, hypothecate or assign its rights and duties under
this Agreement without the
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written consent of Sunhawk. No rights of IMEC hereunder shall devolve by
operation of law or otherwise upon any receiver, liquidator, trustee, or other
party. This Agreement shall inure to the benefit of Sunhawk, its successors and
assigns.
11.7 Waiver and Amendments. No waiver, amendment, or modification of any
provision of this Agreement shall be effective unless consented to by both
Parties in writing. No failure or delay by either Party in exercising any
rights, power, or remedy under this Agreement shall operate as a waiver of any
such right, power, or remedy.
11.8 Agency. The Parties are separate and independent legal entities.
IMEC is performing services for Sunhawk as an independent contractor. Nothing
contained in this Agreement shall be deemed to constitute either IMEC or
Sunhawk an agent, representative, partner, joint venturer or employee of the
other party for any purpose. Neither Party has the authority to bind the other
or to incur any liability on behalf of the other, nor to direct the daily work
activities of the other. Sunhawk shall however have the right to provide
support in the use of its Editor software, suggestions on procedures for
creating Final Files, and comments and corrections on the Final Files which are
submitted for approval.
11.9 Titles and Headings. The titles and headings of each section are
intended for convenience only and shall not be used in construing or
interpreting the meaning of any particular clause or section.
11.10 Contract Interpretation. Ambiguities, inconsistencies, or conflicts
in this Agreement shall not be strictly construed against the drafter of the
language but will be resolved by applying the most reasonable interpretation
under the circumstances, giving full consideration to the Parties' intentions
at the time this Agreement is entered into.
11.11 No Third Party Rights. This Agreement is not for the benefit of any
third party, and shall not be considered to grant any right or remedy to any
third party whether or not referred to in this Agreement.
11.12 Singular and Plural Terms. Where the context of this Agreement
requires, singular terms shall be considered plural, and plural terms shall be
considered singular.
11.13 Limitation on Liability; Remedies. Except as provided in Section 7
above, and except in the case of the infringement or violations of copyright,
trade secret, trademark or any other intellectual property rights, neither
party shall be liable to the other party for any incidental,
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consequential, special, or punitive damages of any kind or nature, including,
without limitation, the breach of this Agreement or any termination of this
Agreement, whether such liability is asserted on the basis of contract, tort
(including negligence or strict liability), or otherwise, even if either party
has warned or been warned of the possibility of any such loss or damage.
IT WITNESS WHEREOF, this Agreement is executed as of the Effective Date set
forth above.
International Music Engraving Company Sunhawk Corporation
By: XXX XXX BONG By: XXXXX XXXXX
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/s/ Xxx Xxx Bong /s/ Xxxxx Xxxxx
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Xx. Xxx Xxxx Xxx Xxxxx Xxxxx
Its: President, IMEC Its: CEO
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SCHEDULE A
SPECIFICATIONS
1. The Final Files shall conform to the Sunhawk Style Manual and any revisions
or updates which are issued during the term of this Agreement.
2. The Final Files will be of a quality consistent with that prepared and
published by Sunhawk.
3. The Final Files shall conform to the quality of sample files (for both a
visual and audio quality) and printed music provided by Sunhawk, including
the "Good and Bad" files, "Samples" and "Showcase Pages" located at
[*].
4. The Final File shall conform to any style or corrections memos which may
be issued by Sunhawk.
5. For each Final File submitted, IMEC will provide Sunhawk with the name of
the IMEC employee who did the final quality review ("slotted") of the
Final File.
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SCHEDULE B
DELIVERY AND PAYMENT SCHEDULE
Delivery Schedule
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Payment upon Acceptance
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SCHEDULE C
STAFFING QUALIFICATIONS
o Music Degree (B.A.) or advanced music skills
o Extensive experience using music notation software
o Excellent verbal communication skills
o Ability to work both independently and in team work environment
o Good trouble-shooting skills
o Excellent knowledge of music notation
o Excellent ear training
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AMENDED SCHEDULE B
DELIVERY AND PAYMENT SCHEDULE
Delivery Schedule
IMEC shall deliver no less than 500, and no greater than 1500 additional Pages
by January 31, 1999.
During each subsequent month that this Agreement is in effect, IMEC shall
provide no less than 500, and no greater than 1500 additional Pages per month.
Payment upon Acceptance
$15 for Pages delivered under this Amended Schedule B.
Advance
As an advance against pages accepted by Sunhawk, Sunhawk shall pay IMEC $10,000
upon the execution of this Agreement by both parties. Said advance shall be
recoupable against fees due for accepted pages under this Schedule. That is, no
additional fees shall be payable to IMEC until the $10,000 is recouped by
Sunhawk. Any un-recouped advance shall be repaid to Sunhawk in the event this
Agreement is terminated because of a breach by IMEC.
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AMENDMENT #1 TO MUSIC CONVERSION AGREEMENT
This is an amendment to the Agreement which was made as of April 1, 1998 (the
"Effective Date") by and between Sunhawk Corporation, a Washington corporation
with offices at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX 00000 XXX and
International Music Engraving Company, with its principal place of business at
#7 Xxxx Xxxx, Xxxxxx Xxxx, 0000, Xxxxxxxxxxx ("IMEC").
Whereas the parties wish to amend the terms of the Agreement, and in of the
premises and mutual covenants and agreements set forth herein, Sunhawk and IMEC
hereby amend the Agreement effective December 17, 1998 as follows.
1. The Agreement is hereby amended to add the attached "Amended Schedule B."
2. A new Section 9.2 is added as follows: "Termination for Convenience.
Sunhawk or IMEC shall have the right to terminate this Agreement at its
convenience (with or without cause) upon Two (2) months written notice."
Except as provided in this amendment, and except to the extent any term in the
Agreement is inconsistent with the terms of this amendment, all other terms and
conditions of the Agreement shall remain unmodified and are hereby reaffirmed.
IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date set
forth above.
International Music Engraving Company Sunhawk Corporation
By: XXX XXX BONG By: XXXXX XXXXX
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/s/ XXX XXX BONG /s/ Xxxxx Xxxxx
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Xx. Xxx Xxxx Xxx Xxxxx Xxxxx
Its: Its: CEO
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