Exhibit 10.32

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DIGITAL MUSIC GROUP, INC.

DIGITAL DISTRIBUTION AGREEMENT

Digital Music Group, Inc., a Delaware corporation with a place of business at
2151 River Plaza Drive, Suite 200, Sacramento, CA 95833 (“DMG”), and TufAmerica,
Inc., a New York corporation. (d/b/a Tuff City and Night Train Music Group) with
a place of business at 250 West 49th Street, Suite 705 New York, NY 10019
(“TufAmerica”) agree and enter into this Digital Distribution Agreement
(“Agreement”) as of September 12, 2006 (“Effective Date”).

AGREEMENT

1. DEFINITIONS.

Capitalized terms used in this Agreement shall have the meanings set forth in
this Section 1 or elsewhere herein. All definitions below or elsewhere in this
Agreement apply to both their singular and plural forms, as the context may
require.

“Closing” shall mean the Effective Date.

“Electronic Transmission” means any transmission to the consumer, whether
interactive, non-interactive, on-demand, or near demand, of sound alone direct
to consumer sales in any form, now known or later developed, including but not
limited to telephonic, Internet, wireless, satellite or cable based streaming,
telephonic, Internet, wireless, satellite, or cable based downloading,
“cybercasts,” “webcasts,” multipoint distribution service, point-to-point
distribution service, direct broadcast satellite, point-to-multipoint satellite,
cable system, telephone system, Video over Internet Protocol, and any other form
of electronic or digital transmission now known or hereinafter devised, whether
to a computer, any form of audio playback device (including but not limited to
set-top boxes, handheld playback units, and cellular phones), or to any digital
home or personal entertainment system or unit, whether now known or later
developed.

“Masters” means [*] master audio recordings comprised of vintage jazz, blues,
funk, soul and “urban” recordings, including original recordings by Ray Charles
and Queen Latifa (but specifically excluding any “sound alike” recordings),
which, in TufAmerica’s reasonable opinion are of good commercial and musical
quality, and which are owned or controlled, directly or indirectly by
TufAmerica, or which are licensed to TufAmerica for Electronic Transmissions and
Mobiletones for the Territory for the

 

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted provisions.

 

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Term as of the Effective Date, including, without limitation, the rights to the
copyrights therein as set forth in paragraph 2.1 herein below along with the
rights to secure registrations in such copyrights for all media as set forth in
paragraph 2.1 herein, whether now known or hereinafter discovered. The Masters
shall be set forth in Exhibit A hereto which shall be amended from time to time
to add additional Masters in connection with the delivery and acceptance of
Masters as provided for herein. All accepted Replacement Masters shall be
considered Masters. Notwithstanding the foregoing, the Masters shall include
those master audio recordings identified on Schedule 1 hereto.

“Mobiletone(s)” means audio-visual ring tones, music ring tones, polyphonic
(midi) ring tones, voice tones, mastertones, realtones, singtones or true tones
in any format now known or hereinafter devised.

“Net Receipts” means the actual United States dollar amount actually received by
DMG or any of DMG’s affiliates less only the following costs and fees incurred
in connection with the Masters, (and Option Masters, if any): (a) transaction
processing fees, such as credit card transaction fees and other electronic
commerce processing, royalties or other fees, payable to or retained by
unaffiliated third parties in connection with the Masters, and Option Masters,
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) third party costs and fees incurred by DMG
directly in connection with the sale, license or other commercialization of the
Masters, and Option Masters, if any, (excluding DMG’s overhead and legal fees);
and (e) union, guild or other third party fees pertaining to the Masters, and
Option Masters, if any, (excluding publishing payments) that may be required by
contract or the Copyright Act, if any; and (f) advertising and promotion costs
to promote the Masters (and Option Masters , if any) which have been approved in
advance by TufAmerica.

“Option Masters” means those [*] master audio recordings comprised of vintage
jazz, blues, funk, soul and “urban” recordings, (but specifically excluding any
“sound alike” recordings) which are owned or controlled, directly or indirectly
by TufAmerica, or which are licensed to TufAmerica as of their delivery date,
including, without limitation, the rights set forth in paragraph 2.1 herein
below to the copyrights therein along with the rights to secure registrations in
such copyrights for all media set forth in paragraph 2.1 herein below, whether
now known or hereinafter discovered, which TufAmerica requires DMG to license
pursuant to TufAmerica’s exercise of the Option as provided for in Section 11.
The musical quality and the commercial prospects of the Option Masters shall be
reasonably similar to the musical quality and commercial prospects of the
Masters. All accepted Replacement Option Masters shall be considered Option
Masters.

“Party” means either TufAmerica or DMG as the context requires and “Parties”
means, collectively, TufAmerica and DMG.

“Territory” means the Universe.

 

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted provisions.

 

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2. GRANT OF DISTRIBUTION; DELIVERY OF MASTERS.

2.1 Distribution of Masters. Subject to all the terms and conditions of this
Agreement (including without limitation DMG’s obligation to pay TufAmerica the
Closing Payment pursuant to Section 4.2(a) and the reservations contained in
paragraph 2.8 herein below) TufAmerica hereby grants to DMG an exclusive,
irrevocable, sublicenseable (through one (1) or more tiers) right, during the
Term, within the Territory for itself and to license others to do the same, to
create, reproduce combine an entire Master, or Option Masters, if any, with
material created or furnished by others for the purpose of creating digital
compilations, edit into clips of shorter length for the purpose of creating
Mobiletones, publicly perform, publicly display and digitally perform;
advertise, sell, distribute (through one (1) or multiple tiers), lease, license
or otherwise use and/or dispose of, through Electronic Transmissions or as
Mobiletones, all of the following:

(a) The Masters, subject to this agreement; and

(b) The Option Masters, but only if TufAmerica exercises its Option.

2.2 License for Metadata and Artwork. TufAmerica hereby grants to DMG a
non-exclusive, irrevocable, sublicenseable (through one (1) or more tiers)
right, during the Term within the Territory, for itself and to license others to
do the same, to use all album and promotional artwork, negatives, photographs,
album covers and textual materials and name and likeness materials related to
the Masters (and the Option Masters, if any) that is in TufAmerica’s possession
or control and which have been previously released to the public by TufAmerica,
(collectively, the “Artwork”) and all metadata supplied by TufAmerica associated
with the Masters, (and the Option Masters, if any) as provided for in
Section 2.4(c) (collectively, the “Metadata”).

2.3 Trademark License. TufAmerica hereby grants to DMG an non-exclusive,
irrevocable, royalty-free, sublicenseable (through one (1) or more tiers) right,
during the Term, within the Territory, for itself and to license others to do
the same, to use the approved trademarks set forth on Exhibit C in connection
with the advertising, marketing and promotion of the Masters, the Option
Masters, if any, and DMG’s services, as set forth in this Agreement.

2.4 Delivery and Acceptance of Masters.

(a) At Closing, TufAmerica shall deliver the first group of Masters (“Group One
Masters”) comprised of not less than [*] Masters, delivery of which is hereby
acknowledged. Additionally, at Closing TufAmerica shall delivery no less than
[*] percent ([*]%) of all complete and accurate Artwork and Metadata associated
with the Group One Masters. The remaining Artwork and Metadata associated with
the Group One Masters shall be delivered no later than [*] days thereafter.

(b) TufAmerica shall deliver the second group of Masters (“Group Two Masters”)
comprised of [*] Masters designated by DMG and all associated Artwork and
complete and accurate Metadata not later than [*] from Closing (the “Final
Delivery Date”).

 

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted provisions.

 

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(c) All Metadata shall be delivered in the form of Exhibit B or as otherwise
instructed by DMG, and shall contain all information required for processing of
the Masters by DMG (and the Option Masters, if any) including, without
limitation, song title, artist name, songwriter and publisher information to the
extent available. In addition, if available, TufAmerica shall include whether
the Masters, and Option Masters, if any, are “original recording,” “live” or
“original artist re-recording” as those terms are generally known in the U.S.
music industry, and identification codes attributable to each unique song.

(d) All Masters (and the Option Masters) shall be delivered as a compact disc
(CD) or in .wav file format, or as otherwise instructed by DMG.

2.5 Non Delivery. The failure of TufAmerica to fully deliver in accordance with
this Section 2 all of the Masters and the Artwork and/or Metadata associated
therewith by the Final Delivery Date shall not be deemed a breach of this
Agreement and will not preclude TufAmerica from delivering any Option Masters.
DMG’s sole remedy for TufAmerica’s failure to fully deliver all of the Masters
and the Artwork and/or Metadata associated therewith shall be a pro rata
reduction in the Advance and Licensing Fee payable to TufAmerica in connection
with the undelivered Masters.

2.6 Time is of The Essence. Time is of the essence with regard to the delivery
of the Masters (and the Option Masters) and the associated Metadata and Artwork
as provided for herein.

2.7 Acceptance of Masters.

(a) Upon delivery of the Masters, Metadata and Artwork as provided for herein,
DMG shall have twenty (20) business days (the “Examination Period”) to examine
the Masters and associated Metadata and Artwork to determine that they are
complete, in the proper format, and technically and mechanically fit, and are
vintage jazz, blues, funk, soul, or “urban” recordings. At any time during the
Examination Period, DMG shall send TufAmerica a notice indicating which, if any,
of the Masters are not technically or mechanically fit or are not vintage jazz,
blues, funk, soul, or “urban” recordings. (the “Examination Notice”). TufAmerica
shall repair or replace the Masters identified in the Examination Notice with
vintage jazz, blues, funk, soul or urban master audio recordings owned or
controlled by TufAmerica as of the Effective Date of similar musical quality and
commercial prospects (the “Replacement Masters”). If TufAmerica fails to provide
a Replacement Master, or if DMG, in its sole opinion, rejects the offered
Replacement Masters, DMG shall be entitled to a pro rata reduction in the
Advance and Licensing Fee payable to TufAmerica.

(b) DMG’s failure to deliver an Examination Notice within the Examination Period
shall be deemed DMG’s acceptance of the delivered Masters. Notwithstanding the
foregoing, in the event DMG later discovers a Master to be technically and
mechanically unfit, TufAmerica shall repair or replace such Master as provided
for in Section 2.7(a).

 

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2.8 Reserved Rights. Notwithstanding the foregoing, the following rights are
reserved by TufAmerica:

(a) The physical distribution of pre-manufactured audio or audio-video product
(e.g., vinyl records, cassettes, CDs, VHSs, and DVDs) of the Masters and Option
Masters;

(b) the right to make and authorize third parties to make free thirty
(30) second promotional streams and, with DMG’s prior written approval, which
may be withheld in DMG’s sole discretion, free full length promotional streams
or downloads of an entire recording of a Master or Option Master;

(c) the right to license the Masters and Option Masters, if any, to third
parties for synchronization use in television, advertisements and motion
pictures, regardless whether such television, advertisements and motion pictures
are distributed or broadcast by Electronic Transmission. Additionally,
TufAmerica shall have the right to license individual Masters or Option Masters
for inclusion on third-party compilation records, including soundtracks (“Third
Party Compilation”) and to permit the distribution and sale of the Masters or
Option Masters as part of a Third Party Compilation, but not individually, by
Electronic Transmission, provided that, subject to the payment to TufAmerica of
the applicable royalties, DMG shall be entitled to all income derived from the
distribution via Electronic Transmission of any Third Party Compilation, but
only with respect to any Masters or Option Masters included therein. If
TufAmerica receives any such payment of income, TufAmerica agrees to pay and
account to DMG for such income pursuant to Section 4.1(c) and DMG shall have
those audit rights as provided in Section 4.3.;

(d) The right to license the Masters or Option Masters in connection with the
so-called brick and mortar “manufacture on demand” of phonorecords (even if the
Masters are delivered to the manufacture on demand unit via Electronic
Transmission prior to the embodiment in a phonorecord), provided that such
rights granted by TufAmerica shall not include a delivery of a Master or Option
Master by Electronic Transmission which is intended to result in a specifically
identifiable reproduction of that Master or Option Master on a handheld digital
playback unit, cellular phone or computer;

(e) Radio transmissions (whether analog or digital);

(f) The right to make derivative works;

(g) The right to collect monies payable by statute or collected by a performance
rights organization, including, without limitation non-interactive webcasting,
compulsory licensing and Audio Home Recording Act monies;

(h) The right to enter into agreements for foreground, background and airlines
uses; and

(i) The right to make free full length streams of an entire recording of a
Master or Option Master available from TufAmerica’s website in connection with a
web based application which facilitates the synchronization licensing of sound
recordings.

 

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2.9 Approved Substitution of Masters. In connection with TufAmerica’s delivery
of the Group Two Masters, TufAmerica may request DMG to accept other audio
recordings owned or controlled, directly or indirectly by TufAmerica, or which
are licensed to TufAmerica for Electronic Transmissions and Mobiletones for the
Territory for the Term as of their delivery date in place of certain Group Two
Masters. If DMG accepts such audio recordings they shall be considered Group Two
Masters and TufAmerica shall be credited accordingly for their delivery.

3. OWNERSHIP.

Except for all rights and licenses granted to DMG pursuant to this Agreement,
the Masters, and the Option Masters, and all intellectual property rights
therein shall remain the exclusive property of TufAmerica and its suppliers.

4. PAYMENT TERMS.

4.1 Advances; Fees; Royalties; Fees to Third Parties; Royalty Tail

(a) Advances. DMG will pay TufAmerica a fully recoupable advance (“Advance”)
against Royalties payable to TufAmerica under this or any other agreement in the
amount up to [*] Dollars ($[*]), less any reductions pursuant to Section 2.4.
The Advance is payable as set forth in Section 4.2.

(b) Licensing Fee. In addition to the Advance payable to TufAmerica, DMG will
pay TufAmerica a non-recoupable licensing fee (“Licensing Fee”) up to [*]
Dollars ($[*]). The Licensing Fee is payable as set forth in Section 4.2

(c) Royalties. DMG will pay TufAmerica, subject to recoupment of the Advance and
any amounts due DMG pursuant to Sections 2.7, quarterly royalties (“Royalties”)
equal to [*] percent ([*]%) of the Net Receipts. Subject to DMG’s right to
recoupment, payments will be made on or before the end of the calendar quarter
subsequent to the calendar quarter in which monies relating to the Royalties
were actually received by DMG or any of DMG’s affiliates. TufAmerica
acknowledges and agrees that other than the Advance, the Licensing Fee, the
Royalties, the Additional Royalties, and all mechanical royalties payable to
TufAmerica it will not be entitled to any additional fees or monies from DMG in
connection with the digital public performance of the Masters. All payments made
under this Agreement shall be paid in US dollars. If applicable, conversion of
foreign currency to US dollars shall be made at the conversion rate existing in
the US (as reported in the Wall Street Journal) on the last business day of the
applicable quarter in which such payment accrued.

(d) Additional Royalties. In addition to the Royalties, DMG will pay TufAmerica
additional quarterly royalties (the “Additional Royalties”) equal to [*] percent
([*]%) of the Net Receipts. For the avoidance of doubt, the Additional Royalties
are not subject to recoupment. Payments of Additional Royalties will be made on
or before the end of the calendar quarter subsequent to the calendar quarter in
which monies relating to the Additional Royalties were actually received by DMG
or any

 

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted provisions.

 

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of DMG’s affiliates. TufAmerica shall account directly to any artist for the
Additional Royalties, as provided for in the agreements between TufAmerica and
artists, and shall, during the Term, provide DMG with copies of the applicable
royalty or accounting statements. In the event TufAmerica fails to account
directly to any artist for the Additional Royalties or fails, and continues to
fail, to provide DMG with copies of the applicable royalty or accounting
statements DMG shall have the option to, on TufAmerica’s behalf, pay the
Additional Royalties directly to the artists.

(e) Fees to Third Parties. TufAmerica is solely responsible and DMG will have no
responsibility or liability for any royalties (excluding mechanical royalties,
which shall be the responsibility of DMG and/or DMG’s licensees) and fees
payable to any third party participant in the Masters, or Option Masters
including but not limited to any Artists, or producers. DMG shall be responsible
for payment of mechanical royalties and TufAmerica shall deliver to DMG all
publishing information, including the applicable mechanical royalty rate,
including the terms of any controlled composition clauses, and payee information
for each Master and Option Master delivered as provided for herein. If
TufAmerica is responsible for issuing mechanical licenses at the statutory rate
at the time of sale and within generally accepted industry standards for Digital
Phonorecord Delivery (“DPD”) for any of the Masters or Option Masters, upon
request TufAmerica agrees to issue DMG mechanical licenses for DPD for the
applicable Masters or Option Masters.

(f) Blocked Countries. Unless otherwise agreed to in writing by the Parties, in
the event that any Royalties or Additional Royalties result from monies received
in countries with blocked currency or funds, then DMG agrees to deposit the
Royalties or Additional Royalties in an account reasonably designated by
TufAmerica in such blocked country in accordance with the payment terms set
forth herein.

(g) Security Interest. TufAmerica’s right to receive Royalty or Additional
Royalty payments pursuant to this Agreement (the “Collateral”) is irrevocably
granted, assigned and transferred to DMG as collateral security for payment of
all amounts which DMG is entitled to collect and/or charge against TufAmerica
hereunder. This is a security agreement. Contemporaneously with the execution of
this Agreement, TufAmerica authorizes DMG to file a UCC-1 financing statement
covering all the Collateral, to enable DMG to perfect its security interest in
the Collateral. The following event or condition shall constitute an Event of
Default by TufAmerica under this Agreement: (i) the filing of a petition by or
against TufAmerica under the provisions of the Bankruptcy Code; or (ii) the
dissolution of TufAmerica. Only upon the occurrence of an Event of Default, DMG
shall have and may exercise all rights and remedies accorded to secured party by
the New York and/or California Uniform Commercial Code.

 

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4.2 Payment of Advance and Fee. Subject to the provisions of Sections 2.5 and
2.7, the Advance and Fee shall be payable as set forth below. All amounts
payable pursuant to this Section 4.2 shall be paid in the form of a certified
check or by wire transfer initiated by DMG on the date payment is due, as
requested by TufAmerica.

(a) At Closing DMG shall pay TufAmerica Six Hundred Thousand Dollars ($600,000)
(the “Closing Payment”) comprised of [*] Dollars ([$*]) in Advances, and [*]
Dollars ([$*]) in Licensing Fees. At the conclusion of the Due Diligence Period,
and if DMG has not delivered to TufAmerica a Cancellation Notice, DMG shall pay
TufAmerica [*] Dollars ([$*]), comprised of [*] Dollars ([$*]) in Advances, and
[*] Dollars ([$*]) in Licensing Fees. [*] Dollars ([$*]) of the Closing Payment
(the “Escrow Monies”) shall be released to TufAmerica from escrow pursuant to
that certain October 19, 2005 Escrow Agreement between DMG and TufAmerica (the
“Escrow”). Concurrent with the execution of this Agreement, DMG shall execute
and deliver a letter of authorization in the form of Exhibit D directing the
Escrow agent to release the Escrow Monies to TufAmerica.

(b) Upon delivery and acceptance pursuant to Section 2.7 of the Group Two
Masters and all associated Artwork and Metadata, DMG shall pay TufAmerica [*]
Dollars ([$*]), comprised of [*] Dollars ([$*]) in Advances, and [*] Dollars
([$*]) in Licensing Fees. If TufAmerica delivers and DMG accepts any of the
Group Two Masters earlier than the Final Delivery Date, DMG shall pay
TufAmerica, [*] Dollars ([$*]) per Master, of which [*] Dollars ([$*]) is an
Advance and [*] Dollars ([$*]) is in Licensing Fees. Masters in Group Two
delivered earlier than the Final Delivery Date shall be delivered in batches of
no less than two thousand Masters.

4.3 Audit Rights. During the Term and for two (2) years from the date of each
Royalty payment hereunder, DMG agrees to keep complete and accurate records of
monies received by DMG reasonably necessary to calculate and verify the Royalty
and Additional Royalty payments made to TufAmerica under this Section 4.
TufAmerica shall have the right, through an independent, certified public
accountant or attorney reasonably acceptable to DMG, to audit such records at
the place of business where such records are customarily kept solely in order to
verify the accuracy of the Royalty and Additional Royalty payments actually made
under this Agreement by DMG to TufAmerica. Such independent, certified public
accountant or attorney shall execute an appropriate confidentiality agreement
provided by DMG prior to conducting any audit. Such audits may be exercised once
per year during the Term and any Renewal Term during normal business hours, upon
thirty (30) days’ advance written notice. TufAmerica shall bear the full cost of
all audits. If an audit undertaken by TufAmerica reveals an underpayment of five
percent (5%) or more of royalties due then DMG shall reimburse TufAmerica
reasonable audit costs. TufAmerica and its auditors may not disclose any
information obtained during any audit, and all such information shall be
considered DMG Confidential Information (as defined in Section 9 below), except
to the extent necessary for TufAmerica to reveal such information in order to
enforce its rights under this Agreement or if disclosure is required by law,
subject to the requirements in Section 9 below with respect to any such
disclosure. If any amounts are determined to be due and owing by DMG to
TufAmerica pursuant to this Section 4.3 and are not subject to a good faith
dispute by DMG, such amounts shall be paid to TufAmerica by DMG within fifteen
(15) business days of written notice thereof.

 

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted provisions.

 

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5. POST CLOSING DUE DILIGENCE.

(a) TufAmerica and its employees, representatives and agents shall cooperate
fully with DMG in post-closing due diligence and devote their time and attention
to DMG and its representatives as is necessary for DMG to obtain a thorough
understanding of the Masters and Option Masters, including their content,
condition and history of acquisition by TufAmerica. This shall include
responding on a timely basis to requests by DMG to make all materials and
documents requested by DMG available regarding the Masters and Option Masters
and making access thereto (the “Due Diligence Materials”) available to DMG, and
obtaining and providing background and descriptive information about the Masters
and Option Masters for its due diligence investigation commencing on Closing and
continuing for a period not to exceed seventy five (75) days (the “Due Diligence
Period”).

(b) At any time during the Due Diligence Period, DMG may elect not to go forward
with this transaction and cancel the Agreement. In the event DMG elects to
cancel this Agreement, DMG shall transmit to TufAmerica a notice of its election
to cancel this Agreement (the “Cancellation Notice”).

(c) Upon cancellation of this Agreement as provided for in Section 5(b), all
rights and obligations of the parties shall terminate, including, without
limitation, all rights granted in and to the Masters, the obligation of
TufAmerica to make delivery of any Masters or Option Masters and the obligation
of DMG to pay to TufAmerica any additional Advances or Licensing Fees, and DMG
shall return to TufAmerica all Masters, Metadata and Artwork. TufAmerica shall
return to DMG all Advances or Fees in excess of Six Hundred Thousand Dollars
($600,000).

(d) DMG shall not process nor commercially exploit the Masters in any fashion
until the end of the Due Diligence Period or when DMG informs TufAmerica that
its review of the Due Diligence Materials is complete, whichever is earlier.

6. REPRESENTATIONS AND WARRANTIES. TufAmerica hereby represents and warrants to
DMG all of the following: (a) TufAmerica is duly organized and validly existing
under the laws of its state of incorporation, and has full corporate power and
authority to enter into this Agreement and to carry out the provisions hereof;
(b) TufAmerica is duly authorized to execute and deliver this Agreement and to
perform its obligations hereunder, and any person executing this Agreement on
its behalf has been duly authorized to do so by all requisite corporate action;
(c) This Agreement is legally binding upon TufAmerica and enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditor rights
and judicial principles affecting the availability of specific performance and
general principles of equity whether enforceability is considered a proceeding
at law or equity; (d) throughout the term and for the Territory TufAmerica owns
or has the rights granted herein in and to the Masters, Metadata and Artwork and
all intellectual property rights thereto, or if licensed by TufAmerica, all
necessary rights and licenses to grant the licenses and rights granted to DMG
under this Agreement; (e) throughout the term and for the Territory TufAmerica
shall, at the time of delivery, own or has therights granted herein in and to
the Option Masters, Metadata and Artwork and all intellectual property rights
thereto, or if licensed by TufAmerica, all necessary rights and licenses to
grant the licenses and rights granted to DMG under this Agreement; (f) The
Masters, Option Masters, Metadata

 

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and Artwork are delivered free and clear from all liens and encumbrances;
(g) The Masters, Option Masters, Metadata and Artwork are technically
satisfactory; (h) Neither the Masters, Option Masters Metadata, Artwork or
Trademarks infringe or misappropriate any patent, trademark, copyright, trade
secret know-how, moral rights or other intellectual property rights of any third
party; (i) As of the Effective Date of this Agreement, there is no pending or
threatened claim or liability against Licensor arising out of or relating to the
Masters, Additional Masters or Option Masters or claim that the Masters,
Additional Masters or Option Masters infringe or misappropriate any patent,
trademark, copyright, trade secret know-how, moral rights or other intellectual
property rights of any third party; (j) There is no notice or consent
requirement in connection with the execution and delivery of this Agreement by
TufAmerica and/or the consummation or performance of any of the transactions
contemplated in this Agreement; and (k) There are no contracts which prohibit
TufAmerica from licensing to DMG all of the rights granted hereunder.

7. INDEMNIFICATION.

7.1 Indemnity.

(a) Each party (the “Indemnifying Party”) will indemnify, defend and hold
harmless the other party and its affiliates and their respective officers,
directors, shareholders, employees and agents (the “Indemnified Party”) from and
against any and all losses, liabilities, claims, obligations, costs and expenses
(including reasonable attorneys’ fees), which result from or arise in connection
with or are related in any way to any claim, which if true, would result in a
breach by the Indemnifying Party of this Agreement, including but not limited to
any breach by the Indemnifying Party of any of its representations and
warranties set forth herein. If a third party asserts any claim or allegation
which, if proven, would constitute a breach by the Indemnifying Party of any of
its representations and warranties set forth in this Agreement, the Indemnifying
Party shall be promptly notified of such claim by the Indemnified Party. The
Indemnifying Party shall be entitled to assume direction and control of the
defense of the claim (including the employment of counsel, who shall be
reasonably satisfactory to the Indemnified Party) and the payment of expenses.
The Indemnified Party shall use commercially reasonably efforts to cooperate as
requested in the defense of the claim. The Indemnified Party shall have the
right to employ, at its own expense, separate counsel in any such action or
claim and to participate in the defense thereof. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which indemnity
could have been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such proceeding. If the
Indemnifying Party does not assume the defense of any claim, the Indemnified
Party shall be entitled to assume defense of any such claim, The Indemnifying
Party shall use commercially reasonable efforts to cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party’s expense, all witnesses, records, material and
information in the Indemnifying Party’s possession or control as reasonably
requested by the Indemnified Party.

(b) In the event DMG is the Indemnified Party, in addition to any other rights
or remedies it may have, DMG shall have the right to withhold from any payments
otherwise due to TufAmerica, dollar for dollar, for amounts due to DMG in
respect

 

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of such indemnification, which may include, but is not limited to, an amount
equivalent to that claimed or sued for, plus reasonably anticipated attorney’s
fees and costs relating thereto. Any amount so withheld shall be credited to
TufAmerica’s account (after deduction of any amounts DMG may retain pursuant to
this Section 7.1) when any action has been finally settled or fully adjudicated
and the judgment satisfied, or the statute of limitations on such claim has run.

7.2 Notification of Claims. In the event DMG receives a notice or claim from a
third party (a “Third Party Infringement Claim”) that, if true, would result in
a breach by TufAmerica of its representations and warranties, including, but not
limited to the representations and warranties in Sections 6(d), 6(e) or 6(g)
above, DMG will provide TufAmerica with a copy of the Third Party Infringement
Claim. If, in DMG’s sole opinion, compliance with the Third Party Infringement
Claim requires removing one or more Masters or Option Masters from distribution,
DMG, in addition to all other remedies available, may remove said Master(s) and
shall be entitled to a pro rata reduction in the Advance and Licensing Fee
payable to TufAmerica. If TufAmerica has already been paid the Advance in full,
DMG shall be entitled to offset against any one or more payments due TufAmerica,
dollar for dollar, for the amounts due to DMG in respect of such reduction.

8. LIMITATION OF LIABILITY.

WITH THE EXCEPTION OF THE PARTIES INDEMNITY OBLIGATION PURSUANT TO SECTION 7
HEREIN, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER OR ANY THIRD PARTY
FOR, LOST PROFITS, DATA OR BUSINESS, OR FOR ANY INDIRECT, SPECIAL, INCIDENTAL,
EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE). EITHER
PARTY’S TOTAL AND CUMULATIVE LIABILITY ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT WILL IN NO EVENT EXCEEDS THE SUM TOTAL OF THE ADVANCE, LICENSING FEE
AND ROYALTIES PAID BY DMG TO TUFAMERICA HEREUNDER. THE LIMITATIONS SET FORTH IN
THIS SECTION 8 WILL APPLY EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.

9. CONFIDENTIALITY.

Each Party shall hold in confidence the financial terms of this Agreement and
all materials or information disclosed to it in confidence hereunder
(“Confidential Information”) which are marked as confidential or proprietary, or
if disclosed verbally, reduced to writing and marked confidential within thirty
(30) days after the date of disclosure. Each Party agrees to take precautions to
prevent any unauthorized disclosure or use of Confidential Information
consistent with precautions used to protect such Party’s own confidential
information, but in no event less than reasonable care. The obligations of the
Parties hereunder shall not apply to any materials or information which a party
can demonstrate, through documented evidence (a) is now, or hereafter becomes,
through no act or

 

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failure to act on the part of the receiving party, generally known or available;
(b) is known by the receiving party at the time of receiving such information as
evidenced by its records; (c) is hereafter furnished to the receiving party by a
third party, as a matter of right and without restriction on disclosure; (d) is
independently developed by the receiving party without use of any Confidential
Information; or (e) is the subject of a written permission to disclose provided
by the disclosing party. Notwithstanding any other provision of this Agreement,
disclosure of Confidential Information shall not be precluded if such disclosure
is reasonably necessary in connection with regulatory filings (including filings
with the SEC) and complying with a court order, governmental regulations, or any
applicable law; provided, however, that the responding Party shall first have
given notice to the other Party hereto in order that such other Party may obtain
a protective order requiring that the Confidential Information so disclosed be
used only for which the order was issued and the responding Party uses
reasonable efforts to have such information be treated as confidential and under
seal.

In the event of any breach of this Section 9, the Parties agree that the
non-breaching party will suffer irreparable harm for which money damages would
be an inadequate remedy. Accordingly, the non-breaching party shall be entitled
to seek injunctive relief, in addition to any other available remedies at law or
in equity.

10. TERM AND TERMINATION.

10.1 Term. The term (“Term”) of this Agreement will be perpetual, unless and
until terminated pursuant to Sections 5(b) and 10.2.

10.2 Termination.

(a) Either Party may terminate this Agreement upon the occurrence of any of the
following: (1) upon or after the bankruptcy, insolvency, dissolution or winding
up of the other Party; or (2) upon or after the breach of any material provision
of this Agreement by the other Party if the breaching Party has not cured such
breach within ten (10) days after written notice thereof by the non-breaching
Party. The Parties agree, however, that, in the case of any threat of breach of
any terms or conditions of this Agreement, the non breaching party may take any
appropriate legal action, including without limitation action for injunctive
relief, consisting of orders temporarily restraining and preliminarily and
permanently enjoining such actual or threatened breach.

10.3 Effect of Expiration or Termination.

(a) Upon the expiration or termination of this Agreement, all rights under the
licenses granted hereunder shall automatically terminate, provided however, that
expiration or termination of this Agreement shall not relieve the Parties of any
obligation accruing prior to such expiration or termination. Notwithstanding the
foregoing, in the event this Agreement is terminated due to a material breach by
TufAmerica, DMG shall be relieved of any further obligations under this
Agreement with respect to the Masters and/or Option Masters not theretofore
delivered to, accepted by DMG, and for which the applicable Advance and
Licensing Fee have been paid in accordance with the provisions hereof, including
the obligation to pay

 

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TufAmerica any Advance or Licensing Fee then unpaid, and all Masters, and Option
Masters (and associated Artwork and Metadata) theretofore delivered to and
accepted by DMG shall remain licensed to DMG in perpetuity and DMG shall
continue to enjoy the rights granted to it pursuant to Section 2 provided DMG
continues to pay TufAmerica Royalties and Additional Royalties as provided for
herein. Within thirty (30) days following the expiration or termination of this
Agreement, except to the extent and for so long as a Party is entitled to retain
rights licensed under this Agreement, each Party shall deliver to the other
Party any and all Confidential Information, and any copies thereof, of the other
Party in its possession, except that the Party will be entitled to retain one
(1) copy of all documents in its legal archives for the sole purpose of
monitoring its compliance with its confidentiality obligations hereunder.

10.4 Survival. Sections 1, 2, 3, 4.3 (for the term set forth therein), 6-10 and
12-14 shall survive expiration or termination of this Agreement.

11. OPTION TERMS.

11.1 Option Terms. As additional consideration for the license granted by
TufAmerica to DMG, DMG hereby grants TufAmerica an exclusive, irrevocable Option
(the “Option”) for a period of fifteen (15) months from the Effective Date (the
“Option Period”) to require DMG to acquire the Option Masters. TufAmerica may
exercise the Option, if at all, at one or more times during the Option Period,
but only after delivery and acceptance of all of the Masters that are delivered
by TufAmerica and accepted by DMG, by delivering to DMG a written notice (the
“Option Notice”) stating that TufAmerica is prepared to deliver to DMG Option
Masters and all associated Metadata and Artwork and identifying the Option
Masters to be delivered. If TufAmerica fails to exercise its Option during the
Option Period, the Option shall, without notice, expire.

11.2 Delivery of Option Masters.

(a) DMG shall acknowledge in writing receipt of the Option Notice (the
“Acknowledgement”). Upon receipt of the Acknowledgement, TufAmerica shall have
five (5) days to deliver the Option Masters and their associated Metadata and
Artwork;

(b) Upon any failure of TufAmerica to fully deliver in accordance with Section 2
herein any one Option Master, or the associated Artwork and/or Metadata, or upon
any breach by TufAmerica of Section 6 herein with respect to any Option Master,
in addition to all other remedies available to DMG under this Agreement and at
law, DMG shall be entitled to a pro rata reduction in the Advance and Licensing
Fee payable to TufAmerica.

11.3 Acceptance of Option Masters.

(a) Upon delivery of the Option Masters as provided for herein, DMG shall have
twenty (20) business days (the “Option Masters Examination Period”) to examine
the Option Masters to determine (i) that they and the associated Metadata and
Artwork are complete, in the proper format, and technically and mechanically
fit, (ii) are vintage jazz, blues, funk, soul, or “urban” recordings; and, with
respect to Option Masters that were not were not owned or controlled by
TufAmerica as of the

 

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Closing (the “Post Closing Option Masters”) (iii) are reasonably similar in
commercial and musical quality to the commercial and musical quality of the
Masters. At any time during the Examination Period, DMG shall send TufAmerica a
notice indicating which, if any, of the Option Masters are not technically or
mechanically fit, are not vintage jazz, blues, funk, soul, or “urban”
recordings, and/or which of the Post Closing Optin Masters are not reasonably
similar in commercial or musical quality to the Masters. (the “Option Masters
Examination Notice”). TufAmerica may repair or replace the Option Masters
identified in the Option Master Examination Notice with master audio recordings
owned or controlled by TufAmerica (the “Replacement Option Masters”). Where DMG
rejects a Post Closing Option Master on the ground that is not reasonably
similar in commercial or musical quality to the Masters, TufAmerica may
substitute a Replacement Option Master only with DMG’s prior approval. If DMG
approves a Replacement Option Master it shall be deemed accepted by DMG and
considered an Option Master. If DMG rejects the offered Replacement Option
Master on grounds that it is not reasonably similar in commercial or musical
quality to the Masters, those Replacement Option Masters shall be subject to the
performance requirements in Section 11.5. If TufAmerica fails to provide a
Replacement Option Master within thirty (30) days of the Option Master
Examination Notice, or if DMG rejects the offered Replacement Option Masters for
grounds other than its commercial or musical quality, subject to TufAmerica’s
right to repair or replace such Replacement Option Masters, DMG shall be
entitled to a pro rata reduction in the Advance and Licensing Fee payable to
TufAmerica.

(b) DMG’s failure to deliver an Option Masters Examination Notice within the
Option Master Examination Period shall be deemed DMG’s acceptance of the Option
Masters. Notwithstanding the foregoing, in the event DMG later discovers an
Option Master to be technically and mechanically unfit, TufAmerica shall repair
or replace such Option Master as provided for in Section 11.3(a).

11.4 Option Payment. Upon delivery and acceptance of all the Option Masters and
associated Metadata and Artwork DMG shall pay TufAmerica as follows:

(a) Advances. DMG will pay TufAmerica an Advance against Royalties in the amount
of [*] Dollars ($[*]), less any reductions as provided for herein.

(b) Licensing Fee. In addition to the Advance payable to TufAmerica, DMG will
pay TufAmerica a Licensing Fee of [*] Dollars ($[*]).

(c) Early Delivery. If TufAmerica delivers and DMG accepts any of the Option
Masters in blocks of less then all the Option Masters earlier than the last day
of the Option Period or if TufAmerica delivers and DMG accepts less than all of
the Option Masters, DMG shall pay TufAmerica, [*] Dollars ($[*]) per Option
Master, of which [*] Dollars ($[*]) is an Advance and [*] Dollars ($[*]) is in
Licensing Fees. Option Masters delivered earlier than the last day of the Option
Period shall be delivered in blocks of no less than [*] Masters.

 

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted provisions.

 

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(d) Holdback. In the event DMG rejects any Option Master or Replacement Option
Master on the grounds that it is not reasonably similar in commercial or musical
quality to the Masters, DMG shall be entitled to hold back that portion of the
Advance and Licensing Fee that otherwise would have been payable to TufAmerica
(the “Holdback”).

(e) Royalties. The royalty provisions of Sections 4.1(c) and (d) shall be
applicable to Net Receipts resulting from any exploitation of the Option
Masters.

11.5 Performance Requirement. In the event DMG contends that any Option
Master(s) or Replacement Option Master(s) are not reasonably similar in
commercial or musical quality to the Masters or any accepted Option Masters (the
“Challenged Option Masters”) and TufAmerica disagrees with DMG’s contention, DMG
shall process and offer for sale all Challenged Option Masters in a manner
similar to the Masters and accepted Option Masters. Within six (6) months from
the date a Challenged Option Master is first made available to consumers as an
Electronic Transmission, if consumer purchases of Electronic Transmissions of
the Challenged Option Master are at least ninety percent (90%) of the average
number of consumer purchases of Electronic Transmissions of the Masters and any
accepted Option Masters during the same six (6) month period, said Challenged
Option Masters shall be deemed accepted by DMG and DMG shall pay TufAmerica the
Holdback associated with such Challenged Option Masters. However, if consumer
purchases of Electronic Transmissions of the Challenged Option Master are not at
least ninety percent (90%) of the average number of consumer purchases of
Electronic Transmissions of the Masters and any accepted Option Masters DMG
shall be entitled to reject the Challenged Option Master. Subject to the
provisions of this Section 11, TufAmerica shall have thirty (30) days to replace
said Challenged Option Master. In the event TufAmerica fails to replace the
Challenged Option Master DMG shall be entitled to deduct that portion of the
Advance and Licensing Fee for that Challenged Option Master from the Holdback.
The royalty provisions of Sections 4.1(c) and (d) shall be applicable to Net
Receipts resulting from any exploitation of any Challenged Option Master.

11.6 Option Master Due Diligence. Upon delivery of any Option Masters or
Replacement Option Masters, or any Group Two Master whose Due Diligence
Materials were not provided in connection with the post-closing due diligence
provided in Section 5, TufAmerica and its employees, representatives and agents
shall cooperate fully with DMG in due diligence and devote their time and
attention to DMG and its representatives as is necessary for DMG to obtain a
thorough understanding of the foregoing Masters and Option Masters, including
their content, condition and history of acquisition by TufAmerica. This shall
include responding on a timely basis to requests by DMG to make all materials
and documents requested by DMG available regarding said Masters and Option
Masters and making access thereto available to DMG, and obtaining and providing
background and descriptive information about the Masters and Option Masters for
its due diligence investigation.

 

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11.7 Upon TufAmerica’s exercise of the Option, and conditioned upon DMG’s
compliance with section 12.2, DMG shall be granted the rights provided for in
Section 2 with respect to the Option Masters.

12. INSURANCE If, during the Term, TufAmerica acquires an Errors and Omission
insurance policy and/or other insurance policies that would cover any of the
liabilities for which TufAmerica has an obligation to indemnify DMG, TufAmerica
shall name DMG as additional insured under said policies and shall, within a
reasonable time, provide DMG with certificates of insurance verifying coverage
and will state that the insurance carrier will give DMG thirty (30) days notice
of any insurance cancellation, failure to renew at expiration or material
alteration.

13. PUBLICITY.

Neither party will issue a press release or release publicly any information
relating to this Agreement or the underlying transaction, except with the others
prior written consent, such consent not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, either party shall have the right to make
accurate, non-derogatory statements concerning the existence and general scope
of this Agreement.

14. MISCELLANEOUS.

14.1 Governing Law and Jurisdiction. This Agreement shall be governed and
construed in accordance with the laws of the State of California without regard
to its conflicts of laws provisions and without applying the United Nations
Convention on Contracts for the International Sale of Goods. The sole
jurisdiction and venue for actions related to the subject matter of this
Agreement shall the state and federal courts located in Sacramento County,
California, USA; provided, however, that either Party may seek injunctive relief
and to enforce judgments in any court of competent jurisdiction. Both Parties
consent to the jurisdiction of such courts and each agree that process may be
served in the manner provided herein for giving notices or otherwise as allowed
state or U.S. federal law. In any action or proceeding to enforce rights under
this Agreement, the prevailing party shall be entitled to recover costs and
attorneys’ fees.

14.2 Assignment. This Agreement may not be assigned in whole or in part by
either Party without the prior written consent of the other Party, which shall
not be unreasonably withheld, unless such assignment is made (a) to a parent
corporation or a wholly-owned subsidiary or affiliate or (b) to an entity which
acquires all or substantially all of a Party’s business assets, in which case
this Agreement is freely assignable. The rights and obligations of the Parties
under this Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be null and void.

14.3 Force Majeure. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement when
such failure or delay is caused by or results from causes beyond the reasonable
control of the affected Party, including, but not limited to, fire, floods,
embargoes, war, acts of war (whether war be declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor

 

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disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other Party.

14.4 Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, that provision shall be limited or eliminated to the
minimum extent necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.

14.5 Notice. All notices and other communications provided for hereunder shall
be in writing and shall be delivered personally or by first class mail,
addressed as follows:

If to DMG, addressed to:

Digital Music Group, Inc.

2151 River Plaza Drive

Sacramento, California 95833

Facsimile: (916) 239-6019

Attention: Mitchell Koulouris

with a copy to:

Weintraub Genshlea Chediak

400 Capitol Mall, 11th Floor

Sacramento, CA 95814

Attention: Scott Hervey

Telephone: (916) 558-6065

Facsimile: (916) 446-1611

Email: shervey@weintraub.com

If to TufAmerica, addressed to:

Tufamerica, Inc.

250 West 49th Street

Suite 705

New York, NY 10019

Attn: Jeff Gandel

with a copy to:

Selverne, Mandelbaum & Mintz, LLP

1775 Broadway, Suite 2300

New York, NY 10019

Attention: Michael Selverne, Esq.

 

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Either Party may by like notice specify or change an address to which notices
and communications shall thereafter be sent. Notices sent by mail shall be
effective upon receipt. Notices given personally shall be effective when
delivered.

14.6 Independent Contractors. It is expressly agreed that DMG and TufAmerica
shall be independent contractors. Neither the entering into, nor the performance
of this Agreement, shall create any partnership, joint venture, agency, or
employer-employee relationship between the Parties. Neither Party has the
authority to make any statement, representations or commitments of any kind on
behalf of the other, or to take any action that is binding on the other Party,
without the prior written consent of the other Party.

14.7 Entire Agreement; Amendment. This Agreement (including all exhibits
attached hereto) sets forth all of the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto with respect to the subject matter hereof and supersedes and terminates
all prior agreements and understandings between the Parties. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties hereto unless reduced to writing and signed by the respective
authorized officers of the Parties.

14.8 Headings. The captions to the several sections hereof are not a part of
this Agreement, but are merely guides or labels to assist in locating and
reading the several sections hereof.

14.9 Waiver. Except as specifically provided for herein, the waiver from time to
time by either of the Parties of any of their rights or their failure to
exercise any remedy shall not operate or be construed as a continuing waiver of
same or of any other of such Party’s rights or remedies provided in this
Agreement.

14.10 Counterparts. This Agreement may be executed by counterparts, of which
shall be deemed to be originals but both of which shall constitute one and the
same Agreement. Facsimile signatures shall be deemed to have the same effect as
their originals.

IN WITNESS WHEREOF, the parties have executed this Digital Distribution
Agreement as of the Effective Date.

 

DIGITAL MUSIC GROUP, INC.     TUFAMERICA, INC. By:   /s/ Mitchell Koulouris    

By:

  /s/ Jeff Gandel Its:   President and CEO     Its:     

 

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Exhibit A

Digital Distribution Agreement

Digital Musci Group, Inc. and TufAmerica, Inc.

 

 

[*]

 

 

 

 

* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

 

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Exhibit B

(Metadata)

 

Metadata and Materials Requirements     

Audio

  

Video

Metadata Required For a Track (Audio) or

Episode (Video):

  

•      Track Name

•      Track Artist (if different from Album Artist)

•      Publisher(s) and publisher splits (if available)

•      Songwriter(s) and songwriter splits (if available)

•      ISRC (if available)

•      Territory Rights, if any (if at a track level)

•      pointer to Audio File (physical location or digital file location)

  

•      Season number

•      Episode number

•      Episode name (if any)

•      Air date (if any)

•      Guest Star(s) (if any)

•      Episode Recap (if any)

Meta-Data Required for an Album (Audio) or

Program (Video):

  

•      Album Title

•      Album Artist

•      pointer to Album Artwork File

•      Schedule of Tracks for Album

•      UPC (if available)

•      Genre (if available)

•      Territory Rights if any, (if at an album level)

•      Label Name (if different from catalog owner)

  

•      Program Title

•      Production Company

•      Creator

•      Director

•      Star

•      Co-Star(s)

•      Genre

Materials Requirements:   

Delivered on Audio Compact Disks created under Red Book format specifications
or;

 

Uncompressed audio on hard disk in .WAV format at CD-quality audio (44.1 kHz,
16-bit stereo); or as otherwise agreed to by the parties..

  

MPEG-2

 

Video

•      16mbit/sec MPEG-2

•      640x480 NTSC 29.97

•      4:2:0 color space long open GOP (15) Progressive (if interlaced, top
field first)

Audio

•      MPEG-1 Layer II 384kbit/sec

•      Stereo, Mixed into program stream

 

Beta SP (Digital or Analog)

Artwork:   

Delivered as hard copies as part of Compact Disk album package(s) or;

 

Uncompressed graphics files on hard disk in .TIF format at 100% size and 300 dpi
resolution.

  

Delivered as hard copies as part of DVD package(s) or;

 

Uncompressed graphics files on hard disk in .TIF format at 100% size and 300 dpi
resolution.

File Format:

   Excel Spreadsheet or SQL Server Database    Excel Spreadsheet or SQL Server
Database

 

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Exhibit C

(Trademarks)

TUFF CITY RECORDS

NIGHT TRAIN INTERNATIONAL

TUFAMERICA

 

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Exhibit D

(Letter of Authorization)

August 12, 2006

VIA FACSIMILE (212) 259-3910

AND U.S. MAIL

Selverne, Mandelbaum & Mintz, LLP

Whitney Broussard, Esq.

1775 Broadway, Suite 2300

New York, NY 10019

 

  RE: LETTER OF AUTHORIZATION

Mr. Broussard:

Pursuant to Section 3.1(a) of that certain October 19, 2005 Escrow Agreement
(“Escrow Agreement”) between Digital Music Group, Inc. (“DMG”) and TufAmerica,
Inc. (“TufAmerica”), DMG hereby instructs Selverne, Mandelbaum & Mintz, LLP as
escrow agent to release to TufAmerica all Escrow Funds, as that term is defined
in the Escrow Agreement. Please provide DMG with notice that these instructions
have been complied with, including notice of the total amount released to
TufAmerica.

Thank you for your cooperation.

 

Very truly yours,

/s/ Mitchell Koulouris

Mitchell Koulouris

Digital Music Group, Inc.

cc: Jeff Gandel (via facsimile: 212-586-1081)

 

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