EXHIBIT 10.7
COMPAQ
May 20, 1998
Xxxxxx Xxxxx
Vice President, Business Development
0000 Xxxxxxxx, 0/xx/ Xxxxx
Xxxxxxx Xxxx, XX 00000
Re: Letter of Agreement
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Xx. Xxxxx,
Enclosed please find a final executed Letter of Agreement for your records.
If you have any questions, please feel free to call Xxxx Xxxxxxxx at
650.742.8734.
Regards,
/s/ XXXXXX X. XXXXXXX
COMPAQ COMPUTER CORPORATION
Xxxxxx X. Xxxxxxx
GM/Id
Cc: X. Xxxxxxx
Compaq Computer Corporation
20555 SH 249
Houston, TX 00000-0000
Tel 000-000-0000
March 23, 1998
Liquid Audio, Inc.
Attention: Xxxxxx Xxxxx
Vice President, Business Development
0000 Xxxxxxxx, 2/nd/ Floor LETTER OF AGREEMENT
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Redwood City, CA 94063 via Federal Express
Xx. Xxxxx,
This Letter Of Agreement ("AGREEMENT") expresses the understanding of Liquid
Audio, Inc. ("Liquid Audio") to license Compaq Computer Corporation ("COMPAQ")
to incorporate, market and distribute Liquid Audio's Liquid MusicPlayer
("LICENSED SOFTWARE") to end-users ("CUSTOMERS") with the following terms and
conditions:
1. DESCRIPTION OF LICENSED SOFTWARE:
TITLE Royalties
---------------------------------------------------------------------------
Liquid MusicPlayer [*]
2. PERIOD: Option to bundle Licensed Software for two years (2) commencing
March 1, 1998 and automatically renew for 1 year increments unless
otherwise notified in writing.
3. LICENSE GRANT: Subject to integration, compatibility testing, LICENSED
SOFTWARE preview and approval by Compaq, Liquid Audio grants to COMPAQ a
non-exclusive, non-transferable, worldwide license to use the LICENSED
SOFTWARE and URL internally and to market, sublicense and distribute the
LICENSED SOFTWARE and URL. As used herein, the term "use" includes the
right to make, have made, copy, reproduce, perform, display, and internally
distribute the LICENSED SOFTWARE and URL for the purposes of this
Agreement.
Subject to the terms and conditions of this Agreement, Liquid Audio hereby
grants to COMPAQ a non-exclusive right and license to (a) advertise,
promote or display the inclusion of the LICENSED SOFTWARE and URL in
packaging of Products subject to reasonable approval by Liquid Audio; (b)
reveal and display the names or likeness of the actors and artists whose
performances are embodied in the LICENSED SOFTWARE and URL through the use
of the LICENSED SOFTWARE; (c) reveal and display the titles of the songs
and or the names of the artists promoted within the LICENSED SOFTWARE and
URL through the use of the LICENSED SOFTWARE. In addition, COMPAQ shall not
assign a retail value to the APPLICATION and URL. COMPAQ acknowledges that
its use of the trademarks and other intellectual property referenced in the
paragraph is limited to the use licensed in this AGREEMENT and that COMPAQ
has not acquired, and will not acquire, any ownership rights therein.
* Certain information in this Exhibit has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect
to the omitted portions.
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4. DELIVERY OF LICENSED PRODUCTS: Liquid Audio will communicate a resolution
(fix or otherwise) to COMPAQ within three (3) working days after
notification of defects in LICENSED SOFTWARE. For all fixed LICENSED
SOFTWARE, Liquid Audio will deliver updates to COMPAQ no later than five
(5) calendar days after such notification. The foregoing procedure shall be
repeated until COMPAQ either accepts the LICENSED SOFTWARE or, at its sole
discretion, eliminates the LICENSED SOFTWARE from the current bundle.
Elimination from the bundle shall not automatically terminate this
agreement.
5. DISTRIBUTION: COMPAQ agrees that distribution is limited to the following
methods of bundling or preinstalling with the PRODUCT: (a) include LICENSED
SOFTWARE and URL with selected internet access capable desktop and/or
portable computers; (b) bundle with other hardware via CD-ROM or DVD-ROM
media which includes LICENSED SOFTWARE and URL; (c) provide a CD-ROM or
DVD-ROM media which includes LICENSED SOFTWARE and URL; or (d) make
available a downloadable version of LICENSED SOFTWARE from the Compaq
Internet World Wide Web site.
6. REVENUE SHARING: Liquid Audio will pay to COMPAQ an amount equal to [*]
of any of Liquid Audio's revenues received (less actual taxes and actual
credits) with respect to the purchase of any LICENSED SOFTWARE upgrade by
any end user who has a copy of the LICENSED SOFTWARE bundled on the PRODUCT
for the term of this AGREEMENT. Liquid Audio will track sales attributed to
COMPAQ through a uniform resource locator and provide quarterly reports of
such sales to Compaq. Liquid Audio shall pay COMPAQ on a quarterly basis
with payments to be made to COMPAQ within 30 days from the end of each
quarter. Payment shall be made payable to Compaq Computer Corporation,
Attn: Xxxxx Xxxxxxxx, PO Box 692000, MS 130705, Houston TX 77269-2000.
7. AUTHORIZED SUBCONTRACTORS: Liquid Audio agrees that all COMPAQ sites,
subsidiaries, affiliated companies and subcontractors shall be entitled to
copy, manufacture and distribute the LICENSED SOFTWARE and URL under this
AGREEMENT.
8. TERMINATION: The parties agree that should termination of this AGREEMENT be
necessary, notice shall be provided in writing. Additionally, Compaq
reserves the right to immediately terminate access to the LICENSED SOFTWARE
if material on the Liquid Audio's World Wide Web site is deemed
inappropriate by COMPAQ. For so long as necessary for COMPAQ to satisfy its
then existing contractual obligations to CUSTOMERS, COMPAQ shall retain a
limited license to use the LICENSED SOFTWARE and URL in order to satisfy
such obligations and to exhaust its inventory of LICENSED SOFTWARE and URL
existing at expiration or termination unless terminated by Liquid Audio
under section 9 b) below.
9. WARRANTY AND INDEMNIFICATION:
(a) Liquid Audio represents and warrants that:
(i) the LICENSED SOFTWARE and URL does not infringe any copyright,
trademark, patent enforceable or publicity rights under the laws of
any country in which the LICENSED SOFTWARE and URL or its upgrades are
distributed by Liquid Audio; and
(ii) the LICENSED SOFTWARE and URL does not violate the trade secret rights
of a third party; and
* Certain information in this Exhibit has been omitted and filed separately
with the Commission. Confidential treatment has been requested
with respect to the omitted portions.
Page 2 of 4
(iii) Liquid Audio has the right to grant the rights it has granted under
this AGREEMENT.
Liquid Audio agrees to indemnify, hold harmless, and defend COMPAQ from any
and all damages, costs, and expenses, including reasonable attorney's fees,
incurred in connection with a claim which, if true, would constitute a
breach of warranties set forth in Section 9 (a) (hereinafter claims under
Section 9(a)(i) and Section 9(a)(ii) shall be collectively referred to as
"Infringement Claims"); provided Liquid Audio is notified promptly in
writing of an Infringement Claim and has sole control over its defense or
settlement, and COMPAQ provides reasonable assistance in the defense of
same at Liquid Audio's expense. To the extent that Liquid Audio receives
notice of infringement from a third party and such notice of infringement
relates to LICENSED SOFTWARE and/or URL, Liquid Audio agrees to promptly
notify COMPAQ of such notice. In the event that Liquid Audio is sued by a
third party in connection with a notice of infringement, Liquid Audio
agrees to provide COMPAQ with monthly updates (and updates in event of a
significant development) of such litigation.
(b) Following notices of an Infringement Claim, Liquid Audio may terminate
this AGREEMENT or, at its expense, without obligation to do so, procure for
COMPAQ the right to continue to market, use, and have others use, the
alleged infringing LICENSED SOFTWARE and/or URL or, without obligation to
do so, may replace or modify the LICENSED SOFTWARE and/or URL to make it
non-infringing ("Non-Infringing LICENSED SOFTWARE"). If Liquid Audio elects
to replace or modify the LICENSED SOFTWARE and/or URL, such replacement
shall meet substantially the specifications as provided or referenced in
the applicable LICENSED SOFTWARE and/or URL description provided by Liquid
Audio and shall be subject to the acceptance provisions of this AGREEMENT.
(c) Provided that Liquid Audio has not terminated this AGREEMENT to the
extent that COMPAQ is able to procure a license, on reasonable terms and
conditions, which would permit COMPAQ to continue to offer LICENSED
SOFTWARE, if such LICENSED SOFTWARE is found to be infringing, Liquid Audio
agrees to reimburse COMPAQ for any associated costs that may be incurred in
securing such a license. All remedies set forth in this Section 9(c) shall
not be subject to or limited by in any way the limitation of liability.
10. PRODUCT INDEMNIFICATION: Liquid Audio fully releases and indemnifies Compaq
from any and all product liability claims that may arise from any product
or service provided by Liquid Audio under this Agreement. Liquid Audio
assumes all liability with respect to such product liability claims and
will indemnify, and hold harmless an defend COMPAQ from any and all
damages, costs and expenses, including reasonable attorney's fees, incurred
in connection with such claims.
11. PUBLICITY: Liquid Audio shall not publicize the existence of this AGREEMENT
with COMPAQ, nor refer to COMPAQ in connection with any promotion, press
release or publication without the prior written approval of COMPAQ, which
approval shall not be unreasonably withheld. Additionally, Liquid Audio may
not make any Compaq approved announcement earlier than one week after
Compaq's product announcement.
12. CUSTOMER SUPPORT: During the PERIOD of this AGREEMENT, Liquid Audio shall,
at its expense, provide support for the LICENSED SOFTWARE directly to the
CUSTOMER as part of this AGREEMENT; such support shall be equivalent or
exceed the support offered on the Internet or in the retail channel by
Liquid Audio to its other customers. COMPAQ's customer service organization
may refer all customer service calls relating to the LICENSED SOFTWARE to
the
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Liquid Audio customer support organization. COMPAQ may publish the Liquid
Audio customer support phone number in documentation that may accompany
PRODUCT.
13. SIGNATURES:
If the foregoing correctly states our understandings please sign and return
a copy of this letter.
COMPAQ COMPUTER CORPORATION LIQUID AUDIO, INC.
/s/ Xxx Xxxxxxx /s/ Xxxxxx Xxxxx
------------------------------------- ------------------------------
Name: Xxx Xxxxxxx Name: Xxxxxx Xxxxx
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Title: Vice President & General Manager Title: VP Business Development
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Consumer Products Group
Date: 5-11-98 Date: May 1, 1998
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