EXHIBIT 10.41
OEM AGREEMENT
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WHEREAS Liquid Audio, Inc., a California corporation, with offices at 000
Xxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000 (hereinafter referred to as
"Liquid Audio") has developed a specification (referred herein as the "Secured
Portable Player Protocol" or "SP-3") to download audio to be written to and
playable on consumer electronics devices; and
WHEREAS Sanyo Electric Co., Ltd., a Japanese corporation with offices at 1-
0, Xxxxx-xxx, Xxxxx Xxxx, Xxxxx 000-0000, Xxxxx hereinafter referred to as
"OEM", wishes to build a consumer electronics device utilizing the Secured
Portable Player Protocol;
NOW THEREFORE THE PARTIES HEREBY AGREE AS OF THIS 2nd DAY OF JUNE 1999
("EFFECTIVE DATE") AS FOLLOWS:
DELIVERABLES: Described in Attachment 2
DELIVERABLE SCHEDULE: Described in Attachment 2
EFFECTIVE DATE: June 2,1999
TERM: Two years from Effective Date
OEM PRODUCTS: Described in Attachment 3
ROYALTY FEE: [***]
NRE FEE: [***]
SHIP DATE OF DEVICE: September 1999
This Agreement (the "Agreement") consists of this cover page and
Attachments 1, 2, 3, 4 and 5 hereto and all Schedules thereto.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FOR LIQUID AUDIO FOR SANYO ELECTRIC CO., LTD.
BY: /s/ Mr. Xxxxxx Xxxxx BY: /s/ Xx. Xxxxxx Xxxxxx
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Mr. Xxxxxx Xxxxx Xx. Xxxxxx Xxxxxx
TITLE: Vice President TITLE: Senior Manager
DATE: June 2, 1999 DATE: June 2, 1999
*Some material in this Exhibit has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
ATTACHMENT 1
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OEM AGREEMENT TERMS AND CONDITIONS
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Annexed to and made part of that certain OEM Agreement ("Agreement") dated as
of _____________________________________________________,1999, between Liquid
Audio, Inc. "Liquid Audio") and __________ ("OEM").
I. Definitions
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"Deliverables" means Liquid Audio deliverables referred to in the cover page of
this Agreement.
"Devices" means a consumer electronic product developed based on Hardware
Designs incorporating OEM Software into the OEM Products.
"Hardware Designs" means the designs, specifications [and compliance test bench]
that will be used to build and manufacture the Device.
"Invention" means any innovation or feature, whether or not patentable or
registerable, made by or on behalf of either or both of the parties hereto,
which is made in the course of the performance of this Agreement and which
directly results from or directly arises out of the work pursuant to this
Agreement.
"Liquid Audio Products" means the Liquid Audio Player Software and Liquid Audio
Reference Software.
"Liquid Audio Player Software" means the object code version of Liquid Audio's
then current Player Software that Liquid Audio distributes to Liquid Audio's
customers.
"Liquid Audio Reference Software" means the specifications and/or the C level
source and object code version of Liquid Audio's SP-3 device module software
that enables interface protocol for authentication and data transfer, file
format parsing and content decryption.
"Patent Right" means any patent, utility model, registration, and/or design
patent, excluding trademarks, trade names, or copyrights, for any innovation,
discovery, improvement or feature issued in any country and/or filed prior to
one (1) year after termination or expiration of this Agreement.
"OEM Reference Design" means the Hardware Design and OEM Software.
"OEM Products" means OEM's consumer electronic products referred to on the cover
page of this Agreement.
"OEM Software" means versions of Liquid Audio Reference Software as modified for
OEM Products.
"Territory" means all countries and territories worldwide.
"Tools" means OEM's tools necessary or desirable to enable Liquid Audio to
provide technical engineering assistance to OEM hereunder.
II. Software License
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(a) Liquid Audio License Grant. Subject to all the terms and conditions of
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this Agreement, Liquid Audio hereby grants to OEM under Liquid Audio's patents,
copyrights, and trade secrets, during the Term, a non-exclusive, royalty-free,
nontransferable, non-sublicensable license in the Territory: (i) to use, copy,
modify and make derivative works of Liquid Audio Reference Software, including
source code thereof, to develop the OEM software; (ii) to incorporate OEM
Software, in object code only, into OEM Products to create Devices; (iii) to
copy Liquid Audio Player Software; (iv) to copy OEM Software, by embedding it in
Devices; and (v) to distribute in the Territory the Liquid Audio Player Software
and the OEM Software only on a bundled basis in connection with OEM's
distribution of Devices in the ordinary course of OEM's business.
(b) Limitations. Notwithstanding any other provision of this Agreement,
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OEM shall not reproduce or have reproduced the OEM Software except in connection
with the production of Devices, nor shall OEM distribute any OEM Software except
as part of a Device or Liquid Audio Player Software except in connection with
the distribution of Devices.
(c) Reservation of Rights. Liquid Audio hereby reserves to itself all
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rights to the Liquid Audio Products not expressly granted to OEM herein. OEM
shall have no rights in or to the Liquid Audio Products except as expressly
granted herein.
(d) Player End-User License Agreements. OEM shall distribute each Device
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with an end-user license agreement substantially in the form attached hereto as
Attachment 4.
(e) No Reverse Engineering. OEM shall not, and shall not permit any third
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party to, alter, modify, adapt, translate, prepare derivative works from,
decompile, reverse engineer, disassemble, or otherwise attempt to derive
computer source code from, as applicable, the Liquid Audio Products, except as
may be expressly permitted by applicable local law or Section II(a) herein.
(f) Licensing Relationship. The Liquid Audio Products are licensed, not
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sold, by Liquid Audio to OEM and distributed by OEM to its customers, and
nothing in this Agreement shall be interpreted or construed as a sale or
purchase of the Liquid Audio Products.
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(g) Proprietary Rights Notices. OEM shall neither alter nor remove any
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copyright notice or other proprietary rights notices which may appear on any
Liquid Audio Product. In addition, OEM agrees that any reproduction of any
Liquid Audio Product (or any portion thereof) authorized by Liquid Audio shall
include such copyright and other proprietary rights notices as are currently
contained on each such Liquid Audio Product or as may be reasonably specified
from time to time by Liquid Audio. All promotional material relating to any
Device shall also contain a reference, in such form as Liquid Audio shall
reasonably prescribe, to Liquid Audio's proprietary rights in the Liquid Audio
Products.
(h) Best Efforts. OEM shall use its best efforts to promote the marketing
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and distribution of Devices to realize the maximum sales potential for the
Devices in the Territory. OEM agrees that it will bundle the Liquid Audio Player
Software with Device for so long as Devices incorporate the OEM software. OEM
agrees that it will make the Liquid Audio Player Software available for download
from all appropriate Web sites that it operates or controls.
(i) OEM-branded Liquid Audio Player Software. OEM will provide graphics
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for a co-branded to be included with the Liquid Audio Player Software to be
distributed hereunder with the Device. OEM hereby grants to Liquid Audio a non-
exclusive, non-sublicensable, non-assignable license to use trademarks provided
by OEM on such faceplate.
III. Use of Liquid Audio Trademarks and Liquid Audio Trademark License
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(a) Grant. Liquid Audio hereby grants to OEM a non-exclusive, non-
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sublicensable, non-assignable license to use the Licensed Trademarks in the
Territory during the Term solely in connection with the packaging, labeling,
promotion, advertising, and distribution of Devices. All such use shall be
strictly in accordance with any trademark guidelines that may be supplied by
Liquid Audio from time to time.
(b) Other Marks. OEM shall not use any xxxx confusingly similar to any of
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the Licensed Trademarks at any time.
(c) Quality Control. OEM shall deliver to Liquid Audio, at no cost to
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Liquid Audio, from time to time as reasonably requested by them, representative
samples of any and all items bearing any of the Licensed Trademarks. If, at any
time, any item made or assembled by OEM and bearing any of the Licensed
Trademarks shall, in the sole opinion of Liquid Audio, fail to conform to the
standards of quality set by Liquid Audio, OEM immediately shall take such steps
as are necessary to conform all such items to Liquid Audio's standard of
quality.
(d) Policing. OEM shall aid Liquid Audio in policing the use of the
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Licensed Trademarks and shall otherwise provide Liquid Audio with all reasonable
cooperation in protecting the Licensed Trademarks. OEM shall immediately notify
Liquid Audio of any apparent infringement of any of the Licensed Trademarks that
comes to OEMs attention.
(e) Branding. OEM shall place the Licensed Trademark (or otherwise
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provided by Liquid Audio) in a placement and prominence reasonably approved by
Liquid Audio on the product chassis and packaging for all Devices sold by OEM.
IV. Development and Delivery
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(a) Liquid Audio Deliverables. Liquid Audio will use reasonable commercial
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efforts to deliver Deliverables to OEM promptly after development thereof in
accordance with the Deliverable Schedule set forth in Attachment 2 hereof.
(b) Title to Liquid Audio Deliverables. Title to Deliverables shall not
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pass from Liquid Audio to OEM or third parties, and Deliverables shall at all'
times remain the sole and exclusive property of Liquid Audio.
(c) Delivery of Tools. OEM shall deliver three (3) copies of Tools to
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Liquid Audio within thirty (30) days of the Effective Date.
(d) Title to Tools. Title to the Tools shall not pass from OEM to Liquid
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Audio, and the Tools shall at all times remain the sole and exclusive property
of OEM.
(e) Engineering Support. OEM will develop the OEM Reference Design for the
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Device. Except as otherwise provided in this Agreement, each party will bear its
own expenses in connection with carrying out the development and any other
obligation set forth in this Agreement. During the development of Deliverables,
OEM shall evaluate the Deliverables and shall provide reasonable feedback to
Liquid Audio. Liquid Audio shall provide reasonable engineering support to OEM
in connection with OEM's development of the OEM Software. OEM will use
reasonable commercial efforts to commence sale of the Devices in commercial
quantities in accordance with the product launch date set forth in the cover
page of this Agreement.
V. Compensation and Reporting
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(a) Compensation. The Parties' sole compensation under this Agreement
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shall be the mutual benefit derived from offering the OEM Software on the Device
and each party shall retain all revenues derived from their respective
activities.
(b) Licensing Statement. On or before the thirtieth (30th) day following
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the end of every calendar quarter; OEM shall deliver to Liquid Audio a written
statement showing the number of Devices distributed by OEM during the
immediately preceding calendar quarter.
VI. Support
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(a) End User Support. As between the parties, OEM will have the sole
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responsibility to provide end user technical support to customers of Devices.
-3-
VII. Marketing and Production Costs
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(a) Joint Marketing of Device. Liquid Audio and OEM will collaborate on
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a joint press release and launch plan including appropriate marketing promotions
and program, including, without limitation, press release, promotion with major
content providers, coupons, direct marketing to OEM customer base, and any other
appropriate promotions. All of Liquid Audio's promotions regarding devices
incorporating SP3 device module software shall describe OEM as one of Liquid
Audio's preferred partners for consumer products utilizing the Liquid Audio
Reference Software. All OEM's marketing promotion of the Device will refer to
Liquid Audio and SP-3 as one of the OEM's preferred technology partners. OEM
will aggressively promote (using its full complement of advertising/promotional
means) the Device and Liquid Audio's involvement therein.
(b) Production Costs. OEM shall be solely responsible for the cost of
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(i) reproduction of the Liquid Audio Player Software and OEM Software, including
the cost for the media onto which such software is reproduced; (ii) manufacture
of any packaging or labeling in connection with the distribution of the Device;
and (iii) any other marketing and distribution costs related to its sale of
Devices.
(c) Press Release. Liquid Audio and OEM will collaborate to issue a
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joint press release announcing the relationship contemplated by this Agreement.
VIII. Miscellaneous Terms
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(a) Liquid Music Network Agreement. During the Term of this Agreement,
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Liquid Audio, at OEM's option, shall license OEM as a syndication affiliate of
the Liquid Music Network subject to the Liquid Music Network Syndication License
Agreement set forth in Attachment 5.
(b) Major Music Providers. Liquid Audio will collaborate with OEM to
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access the major global providers of musical content to provide content for sale
from designated Web Sites using the Device. If any such content is procured,
Liquid Audio will use reasonable efforts to license any required software to
OEM.
IX. Representations, Warranties, Disclaimers, Etc.
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(a) Warranty Disclaimer. THE LIQUID AUDIO PRODUCTS, AND ANY OTHER ITEMS
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OR GOODS LICENSED OR DELIVERED TO OEM HEREUNDER ARE LICENSED OR DELIVERED TO OEM
"AS IS," AND WITHOUT WARRANTY OF ANY KIND. LIQUID AUDIO HEREBY EXPRESSLY
DISCLAIMS ALL WARRANTIES IN CONNECTION WITH THE LIQUID AUDIO PRODUCTS AND THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF NON-
INFRINGEMENT, MERCHANTABILITY, AND FITNESS FOR A PARTICULAR PURPOSE. LIQUID
AUDIO MAKES NO, AND HEREBY EXPRESSLY DISCLAIMS ANY, WARRANTY (1) OF CONTINUOUS
OR UNINTERRUPTED OPERATION OF LIQUID AUDIO PRODUCTS, (2) THAT THE LIQUID AUDIO
PRODUCTS WILL RUN PROPERLY ON ALL HARDWARE OR COMBINATIONS THEREOF, OR (3) THAT
THE LIQUID AUDIO PRODUCTS WILL MEET OEM'S REQUIREMENTS OR THE REQUIREMENTS OF
ANY OF OEM'S CUSTOMERS.
X. Limitation of Liability
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(a) Total Liability. LIQUID AUDIO'S TOTAL LIABILITY TO OEM FOR ANY KIND
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OF LOSS, EXPENSE, COST, CLAIM OR DAMAGE ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT, UNDER ANY THEORY OF LIABILITY, SHALL BE LIMITED TO THE AMOUNTS PAID
TO LIQUID AUDIO BY OEM HEREUNDER, IF ANY, IN THE TWELVE (12)-MONTH PERIOD
IMMEDIATELY PRECEDING THE EVENT TO WHICH SUCH LOSS OR DAMAGE RELATES.
(b) Exclusion of Damages. IN NO EVENT SHALL LIQUID AUDIO BE LIABLE TO
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OEM FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER
BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY, OR
OTHERWISE, AND WHETHER OR NOT LIQUID AUDIO HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGE. EXCEPT WITH RESPECT TO OR IN CONNECTION WITH ANY PROPRIETARY OR
INTELLECTUAL PROPERTY RIGHT OF LIQUID AUDIO, OEM SHALL NOT BE LIABLE TO LIQUID
AUDIO FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER
BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE), PRODUCT LIABILITY, OR
OTHERWISE, AND WHETHER OR NOT OEM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE.
XI. Term and Termination
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(a) Term. This Agreement shall commence on the Effective Date and shall
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continue for the period set forth in the Main Agreement unless otherwise
terminated earlier in accordance with the terms of this Section XI.
(b) Events of Default. Any of the following events shall be an "Event of
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Default" for purposes of this Section XI:
(i) Insolvency Events: Either party shall cease conducting business
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in the normal course; become insolvent or become unable to meet its obligations
as they become due; make a general assignment for the benefit of creditors;
petition, apply for, suffer or permit with or without its consent the
appointment of a custodian, receiver, trustee in bankruptcy or similar officer
for all or any substantial part of its business or assets; avail itself or
become subject to any proceeding under the U.S. Bankruptcy Code or any similar
state, federal or foreign statute relating to bankruptcy, insolvency,
reorganization, receivership, arrangement,
-4-
adjustment of debts, dissolution or liquidation, which proceeding is not
dismissed within one hundred twenty (120) days of commencement thereof; or
(ii) Material Defaults: Default shall be made by either party in
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the observance or performance of any material term, warranty, representation,
covenant or agreement contained in this Agreement for a period of thirty (30)
days from the date of receipt of written notice from the other party advising of
such default and the defaulting party has not cured such default and so notified
the other party within such thirty (30) day period.
(c) Termination Upon Event of Default. In any Event of Default, the
---------------------------------
party which is not in default, upon written notice any time to the other party,
may terminate this Agreement.
(d) Effect of Termination. Upon any expiration or termination of this
---------------------
Agreement, (a) all rights and licenses granted to OEM under this Agreement shall
terminate. Except as expressly provided herein, all of Liquid Audio's
proprietary rights and confidential information, if any, shall be promptly
returned to Liquid Audio or destroyed by OEM, and certification of destruction
shall be made in writing to Liquid Audio within ten (10) days after such return
or destruction.
(e) Nonexclusive Remedies. The rights and remedies provided to the
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parties in this Section X shall not be exclusive and are in addition to all
other rights and remedies provided by this Agreement or any other relevant
written agreement or available by law or in equity.
(f) Survival. Notwithstanding anything to the contrary contained in this
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Agreement, Sections I, II (except Section If(a)), V (except Section V Co)), VI,
X, IX, X, XI, XII and XIII shall survive any expiration or termination of this
Agreement.
XII. Confidential Information
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(a) Each party acknowledges that by reason of its relationship to the
other party under this Agreement it will have access to certain information and
materials concerning the other party's business, plans, customers, technology
and products that are confidential and of substantial value to such party
(referred to in this Section XII as "Confidential Information"), which value
would be impaired if such Confidential Information were disclosed to third
parties. The terms of this Agreement shall be deemed to constitute the
Confidential Information of Liquid Audio. Each party agrees to maintain all
Confidential Information received from the other, both orally and in writing, in
confidence and agrees not to disclose or otherwise make available such
Confidential Information to any third party without the prior written consent of
the disclosing party. Each party further agrees to use the Confidential
Information only for the purpose of performing this Agreement. No Confidential
Information shall be deemed confidential unless so marked if given in writing
or, if given orally, identified as confidential orally prior to disclosure and
confirmed in writing within thirty (30) days; provided, however, that Licensor
agrees that any Confidential Information in whatever form relating to the
design, functionality, operational methods or coding of Liquid Audio software,
including but not limited to any complete or partial source or object code
versions of such software, shall be deemed Confidential Information of Liquid
Audio regardless of the presence or absence of any confidential markings or
identification.
(b) The parties' obligations under this Section XII shall not apply to
Confidential Information which: (i) is or becomes a matter of public knowledge
though no fault of or action by the receiving party; (ii) was rightfully in the
receiving party's possession prior to disclosure by the disclosing party; (iii)
subsequent to disclosure, is rightfully obtained by the receiving party from a
third party who is lawfully in possession of such Confidential Information
without restriction; (iv) is independently developed by the receiving party
without resort to the disclosing party's Confidential Information; or (v) is
required by law or judicial order, provided that prior written notice of such
required disclosure is furnished to the disclosing party as soon as practicable
in order to afford the disclosing party an opportunity to seek a protective
order and that if such order cannot be obtained disclosure may be made without
liability. Whenever requested by a disclosing party, a receiving party shall
immediately return to the disclosing party all manifestations of the
Confidential Information or, at the disclosing party's option, shall destroy all
such Confidential Information as the disclosing party may designate. The
receiving party's obligation of confidentiality shall survive this Agreement for
a period of five (5) years from the date of its termination, and thereafter
shall terminate and be of no further force or effect.
XIII. Other Provisions
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(a) Amendments. This Agreement may not in any way be modified, changed
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or amended except by a written instrument duly executed by the parties hereto.
This Agreement, when executed, constitutes the entire, final, complete and
exclusive agreement between the parties and supersedes any prior negotiations,
understanding or agreements, whether oral or in writing, concerning the subject
matter hereof.
(b) Governing Law. THIS AGREEMENT IS MADE IN ACCORDANCE WITH AND SHALL
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BE GOVERNED AND CONSTRUED UNDER. THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
REFERENCE TO CONFLICTS OF LAWS PRINCIPLES. IN NO EVENT SHALL THIS AGREEMENT BE
GOVERNED BY THE UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL
SALE OF GOODS.
(c) Jurisdiction. The State and federal courts in Santa Xxxxx County,
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California shall have exclusive jurisdiction and venue over all controversies in
connection herewith, and each party hereby irrevocably consents to such
exclusive and personal jurisdiction and venue.
-5-
(d) Injunctive Relief. In the event of any breach of Section II, III,
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VII or XII, either party may at any time apply to a court of competent
jurisdiction for relief in the form of a temporary restraining order,
preliminary injunction, or other provisional remedy.
(e) Assignments. OEM may not assign this Agreement or any right or
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obligation hereunder, directly, indirectly, by operation of law or otherwise,
without Liquid Audio's prior written consent, and any attempt to do so shall be
void and of no force or effect. Any change of control of OEM shall be considered
an assignment. Notwithstanding the foregoing, this Agreement shall be binding
upon and inure to the benefit of the permitted successors and assigns of each
party.
(f) Severability. If any provision of this Agreement is held to be
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illegal, unenforceable or invalid, no other provision of this Agreement shall be
affected thereby, and the remaining provisions of this Agreement shall be
construed and reformed and shall continue with the same effect as if such
illegal, unenforceable or invalid provision was not a part hereof; provided
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that, notwithstanding any other provision of this Agreement, if any limitation
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on the grant of any license to OEM hereunder is found to be illegal,
unenforceable, or invalid, such license shall immediately terminate. The parties
agree to renegotiate in good faith any term held illegal, unenforceable or
invalid and to be bound by any mutually agreed substitute provision.
(g) Waiver. Any waiver (express or implied) by either party of any
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default or breach of this Agreement shall not constitute a waiver of any other
or subsequent default or breach.
(h) Notices. All notices or other communications required or permitted
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to be given pursuant to this Agreement shall be in writing and shall be
considered properly given or made if hand delivered, mailed first class mail,
postage prepaid, sent by prepaid telegram (or telex or other facsimile
transmission) or sent by express overnight courier service to the relevant
addresses above or to such other address as either party hereto may designate by
like notice sent to the other party hereto. All notices shall be deemed given
when received. A mandatory copy of all notices delivered or sent to Liquid Audio
shall be sent to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000-0000, Attention: Xxxx Xxxxx, Esq.
(i) Headings. The headings and captions contained in this Agreement
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shall not be considered to be a part hereof for purposes of interpreting or
applying this Agreement, but are for convenience only.
(j) Import and Export Controls. OEM understands and acknowledges that
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Liquid Audio is subject to regulation by agencies of the U.S. government,
including the U.S. Department of Commerce which prohibit export or diversion of
certain products, technology and technical data to certain countries. Any and
all obligations of Liquid Audio to provide the Liquid Audio Product, software,
documentation or any media in which any of the foregoing is contained, as well
as any training or technical assistance shall be subject in all respects to such
United States laws and regulations as shall from time:: to time govern the
license and delivery of technology, products and technical data abroad by
persons subject to the jurisdiction of the United States, including the Export
Administration Act of 1979, as amended, any successor legislation, and the
Export Administration Regulations issued by the Department of Commerce,
International Trade Administration, and Bureau of Export Administration.
(k) Contingency. Neither party hereto shall be held responsible for any
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delay or failure in performance hereunder caused in whole or in part by fire,
strike, flood, embargo, labor dispute, delay or failure of any subcontract, act
of sabotage, riot, accident, delay of carrier or supplier, voluntary or
mandatory compliance with any governmental act, regulation or request, act of
God or by public enemy, or any act or omission or other cause beyond such
party's control. If any such contingency shall occur, this Agreement shall be
deemed extended by the length of time such contingency continues.
(l) Independent Contractors. The parties hereto are independent
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contractors and neither party is an employee, agent, partner or joint venturer
of the other. Neither party shall have the right, nor shall either party
attempt, to bind the other party, whether directly or indirectly, to any
agreement with a third party or to incur any obligation or liability on behalf
of such other party, whether directly or indirectly.
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ATTACHMENT 2
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DELIVERABLES AND SCHEDULE
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Deliverables
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SP3 API - A set of C function calls enabling a host application to communicate
with an SP3 compliant device.
SPT File Format - Documentation describing and reference libraries for parsing
the Secure Portable Track (SPT) file format.
SP3 Security Protocols - Documentation describing the SP3 security model and
reference C code/decryption libraries.
Hardware Reference - Design documentation describing the basic architecture of
an SP3-compliant device.
Compliance Test Bench - Documentation and code enabling the device manufacturer
to test and validate SP3 functionality.
Schedule
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TASK DRAFT BETA FINAL
---- ----- ---- -----
SP3 API
Documentation 2/15 5/15 6/1
API 3/15 6/15 6/30
SPT File Format
Documentation 2/15 5/15 6/1
Reference files and code library 3/15 6/1 6/30
SP3 SECURITY PROTOCOLS
DOCUMENTATION 3/1 5/1 6/30
Reference code library 3/15 5/15 6/30
Hardware Reference
Documentation 3/15 5/15 6/30
Compliance Test Bench
Documentation and code 5/15 6/1 6/30
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ATTACHMENT 3
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OEM PRODUCTS
. Portable Personal Stereo Devices
. Home Stereo Audio Decks
. Car Audio Devices
. Mobile Devices
-8-
ATTACHMENT 4
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[Player Products]
END USER LICENSE AGREEMENT
--------------------------
PLEASE READ THIS AGREEMENT CAREFULLY BEFORE ATTEMPTING TO USE
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THE SOFTWARE AND BEFORE CLICKING ON THE "ACCEPT" BUTTON
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OR BREAKING THE SEAL OF ANY INSTALLATION DISKS.
LIQUID AUDIO, INC. ("LIQUID AUDIO") IS WILLING TO LICENSE THE SOFTWARE DESCRIBED
ABOVE (THE "SOFTWARE") TO YOU (THE "CUSTOMER") ONLY ON THE CONDITION THAT YOU
ACCEPT ALL OF THE TERMS CONTAINED IN THIS AGREEMENT. PLEASE READ THE TERMS
CAREFULLY BEFORE CLICKING ON THE "ACCEPT" BUTTON OR BREAKING THE SEAL OF ANY
INSTALLATION DISKS, AS CLICKING ON THE "ACCEPT" BUTTON OR BREAKING THE SEAL WILL
INDICATE YOUR AGREEMENT TO THESE TERMS.
IF YOU DO NOT AGREE TO THESE TERMS, THEN LIQUID AUDIO IS UNWILLING TO LICENSE
THE SOFTWARE TO YOU, AND YOU SHOULD CLICK ON THE "DO NOT ACCEPT" BUTTON TO
DISCONTINUE THE INSTALLATION PROCESS OR RETURN THE INSTALLATION DISKS FOR A
REFUND.
1. LICENSE GRANT AND RESTRICTIONS. Liquid Audio grants to Customer a non-
exclusive, non-transferable, revocable license to use the object code copy of
the Software distributed with this Agreement (the "Copy") along with related
documentation during the term of this Agreement on a single CPU, which may be
changed from time to time. Such license shall be perpetual upon the receipt by
Liquid Audio of full payment of the respective License Fee (as described below)
but shall be terminable as provided herein. Customer (a) may not modify,
disassemble, decompile or reverse-engineer the Software; (b) may not rent,
lease, loan, resell, sublicense, distribute or otherwise transfer the Software
to any third party or use the Software to provide time sharing or similar
services to any third party; (c) may not make any copy of the Software except
for a single working copy and a single backup copy; (d) may not circumvent or
disable any technological features or measures in the Software for protection of
intellectual property rights, and (e) may not delete the copyright and other
proprietary rights notices on the Software. Any attempt by Customer to transfer
any of the rights, duties or obligations hereunder except as expressly provided
for in this Agreement is void. This license does not include any rights to
maintenance or updates.
2. DISABLING SOFTWARE. THE SOFTWARE CONTAINS CODE WHICH MAY BE USED TO DISABLE
SUCH SOFTWARE. THIS DISABLING CODE MAY BE USED TO ENSURE THAT THE SOFTWARE IS
NOT USED IN VIOLATION OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION TO
INFRINGE INTELLECTUAL PROPERTY RIGHTS IN THE SOFTWARE OR ANY CONTENT. CUSTOMER
AGREES AND ACKNOWLEDGES THAT UPON ANY TERMINATION OR EXPIRATION OF THIS
AGREEMENT, AND PROVIDED THAT THE PARTIES HAVE NOT AGREED IN WRITING TO RENEW
THIS AGREEMENT, THE SOFTWARE MAY, AT LIQUID AUDIO'S DISCRETION, CEASE TO
FUNCTION IN SOME OR ALL RESPECTS, AND CUSTOMER MAY LOSE ACCESS TO DATA MADE
WITH, OR STORED USING, THE SOFTWARE. CUSTOMER AGREES TO INDEMNIFY LIQUID AUDIO
FROM ANY LIABILITY, INCLUDING LIABILITY DUE TO THIRD PARTY CLAIMS, RESULTING
FROM SUCH DISABLING OF SUCH SOFTWARE. CUSTOMER AGREES AND ACKNOWLEDGES THAT THE
DISABLING OF THE SOFTWARE IS A KEY FEATURE OF THE LICENSE RIGHTS AND
RESPONSIBILITIES CONVEYED UNDER THIS AGREEMENT.
3. LICENSE FEE. The effectiveness of this Agreement is conditioned on the
receipt by Liquid Audio or its reseller of the License Fee (or any initial
installment thereof) as set forth in Liquid Audio's or its reseller's invoice(s)
therefor. Such payment(s) will be made by Customer on the terms and conditions
specified in such invoice(s).
-9-
4. LIMITED WARRANTY. Liquid Audio warrants for the period of ninety (90) days
from the date of deliver, of the Copy of the Software to Customer that:
(i) The Software, unless modified by Customer, will perform
substantially in accordance with the documentation provided by Liquid Audio.
Customer's sole remedy under this warranty is that Liquid Audio will either
correct within a reasonable period of time any "Software Error" (failure of the
Software to perform in accordance with the documentation) reported during the
warranty period or, if Liquid Audio is unable to correct any such Software
Error, refund to Customer the money paid for the Software. Liquid Audio does not
warrant that the Software will meet Customer's requirements that operation of
the Software will be uninterrupted, error-free or secure, or that all Software
Errors will be corrected.
(ii) The medium if any (such as diskette or CD Rom) provided by Liquid
Audio containing the Software will be free from defects in materials and
workmanship under normal use. Liquid Audio will, at its option, replace or
refund the purchase price of a faulty medium at no charge to Customer if the
same is returned to Liquid Audio.
THE ABOVE WARRANTIES ARE EXCLUSIVE AND 1N LIEU OF ALL OTHER WARRANTIES,
WHETHER EXPRESS OR IMPLIED, AND LIQUID AUDIO EXPRESSLY DISCLAIMS ALL OTHER
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE AND NONINFRINGEMENT. NO ORAL OR WRITTEN INFORMATION OR ADVICE
GIVEN BY LIQUID AUDIO, ITS EMPLOYEES, RESELLERS OR AGENTS SHALL INCREASE THE
SCOPE OF THE ABOVE WARRANTIES OR CREATE ANY NEW WARRANTIES.
SOME STATES DO NOT ALLOW THE EXCLUSION OF IMPLIED WARRANTIES, SO THE ABOVE
EXCLUSION MAY NOT APPLY TO YOU. IN THAT EVENT, ANY IMPLIED WARRANTIES ARE
LIMITED IN DURATION TO NINETY (90) DAYS FROM THE DATE OF DELIVERY OF THE
SOFTWARE. THIS WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS. YOU MAY HAVE OTHER
RIGHTS, WHICH VARY FROM STATE TO STATE.
5. LIMITATION OF LIABILITY. IN NO EVENT WILL LIQUID AUDIO BE LIABLE TO
CUSTOMER OR ANY OTHER PARTY FOR DAMAGES OF ANY KIND ARISING FROM USE OF THE COPY
AND/OR THE SOFTWARE EMBODIED THEREIN, WHETHER RESULTING FROM TORT (INCLUDING
NEGLIGENCE), BREACH OF CONTRACT OR OTHER FORM OF ACTION, INCLUDING BUT NOT
LIMITED TO DIRECT, INDIRECT, SPECIAL, INCIDENTAL AND CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS) OF ANY KIND, ARISING IN ANY WAY OUT OF THIS AGREEMENT,
EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. LIQUID AUDIO'S TOTAL
LIABILITY UNDER THIS AGREEMENT WILL BE LIMITED TO THE LICENSE FEE. Customer
expressly assumes all responsibility for any damages, lost data, lost profits
and other consequential damages that may result in any way out of this
Agreement, including without limitation, use of the Software. Customer expressly
agrees that the License Fee has been agreed to based in part upon the foregoing
limitation of Liquid Audio's liability.
6. OWNERSHIP; PERMISSIONS.
(a) Customer agrees that Liquid Audio and/or its suppliers owns all right,
title and interest in and to the Copy and the Software, including without
limitation any and all copyrights, patents, trade secrets, trademarks and other
intellectual property and proprietary rights therein. Customer will not acquire
any additional licenses under any copyrights, patents, trade secrets, trademarks
or other intellectual property rights on account of this Agreement.
(b) Customer will not alter, encode, copy or transmit any audio or other
information using the Software without obtaining all necessary copyright and
other permissions. Any failure to obtain such permissions constitutes a material
breach of this Agreement, shall cause irreparable harm to Liquid Audio, and
shall entitle Liquid Audio to receive equitable relief for such failure.
Customer will at its expense defend and indemnify Liquid Audio against all
liabilities, damages,
-10-
claims, fines and expenses (including reasonable attorney's fees) arising out of
any claim that Customer has not obtained such permissions.
(c) CUSTOMER ACKNOWLEDGES THAT IN ORDER TO PURCHASE CONTENT, AND TO ACCESS
AND PLAY THE SAME, INCLUDING CONTENT PREVIOUSLY PURCHASED BY CUSTOMER, CUSTOMER
MUST BE AUTHORIZED BY A VALID TIME-LIMITED "PASSPORT" ISSUED PERIODICALLY BY
LIQUID AUDIO IN ACCORDANCE WITH LIQUID AUDIO'S THEN-CURRENT PASSPORT POLICY.
(d) Customer acknowledges that the Passport contains Customer's personal
and confidential information, INCLUDING CREDIT CARD INFORMATION, and that it is
essential to keep the Passport, and the password to the Passport confidential,
both to protect Customer's personal information, and to prevent third-parties
from using Customer's Passport to illegally download, copy, distribute or play
content. Customer agrees to keep his or her Passport confidential, and any
failure of Customer to do so shall be deemed a material breach of this
Agreement. Customer will at its expense defend and indemnify Liquid Audio
against all liabilities, damages, claims, fines and expenses (including
reasonable attorneys' fees) arising out of Customer's breach of this provision.
(e) Customer may be liable for the unauthorized use of Customer's credit
card. Customer is advised to consult the terms and conditions imposed by its
credit card issuer for notification requirements and limitations on Customer's
liability for loss, theft or unauthorized use of Customer's credit card. LIQUID
AUDIO DISCLAIMS ANY LIABILITY FOR ANY USE OF CUSTOMER'S PASSPORT OR CREDIT CARD,
INCLUDING ANY LOSS, THEFT OR UNAUTHORIZED USE THEREOF.
7. TERMINATION. Liquid Audio will have the right to terminate this Agreement
if Customer breaches any material term or condition of this Agreement
(including, if applicable, failure to pay any portion of the License Fee when
due as provided in Liquid Audio's invoice(s) therefor) and fail to cure such
breach within ten (10) days of written notice from Liquid Audio. Upon
termination of this Agreement, the rights and licenses granted to Customer under
this Agreement shall automatically terminate. Within five (5) days after
termination, Customer will return or destroy all copies of the Software and
documentation in Customer's possession. Upon request, Customer will certify to
Liquid Audio that all copies of the Software have been renamed to Liquid Audio
or destroyed. The exercise by Liquid Audio of any remedies under this Agreement
will be without prejudice to its other remedies under this Agreement or
otherwise. The rights and obligations of the parties under Sections 2, 4, 5, 6,
7 and 10 will survive the expiration or termination of this Agreement.
8. GOVERNMENT LICENSEE. If the Software is licensed by or for any unit or
agency of the United States Government, then the Software shall be classified as
"commercial computer software", as that term is defined in the applicable
provisions of the Federal Acquisition Regulation (the "FAR") and supplements
thereto, including the Department of Defense ("DoD") FAR Supplement (the
"DFARS"). Liquid Audio represents that the Software was developed entirely at
private expense, and that no part of the Software was first produced in the
performance of a United States Government contract. If the Software is supplied
for use by DoD, the Software is delivered subject to the terms of this Agreement
and either (i) in accordance with DFARS 227.7202-1 (a) and 227.7202-3(a), or
(ii) with restricted rights in accordance with DFARS 252.227-7013(c)(1)(ii) (OCT
1988), as applicable. If the Software is supplied for use by a Federal agency
other than DoD, the Software is restricted computer software delivered subject
to the terms of this Agreement and (i) FAR 12.212(a); (ii) FAR 52.227-19; or
(iii) FAR 52.227-14(ALT III), as applicable.
9. EXPORT CONTROL. Customer agrees to comply with all export laws and
restrictions and regulations of the United States Department of Commerce or
other United States or other sovereign agency or authority, and not to export,
or allow the export or re-export of any technical data or any Software in
violation of any such restrictions, laws or regulations, or unless and until all
required licenses and authorizations are obtained to the countries specified in
the applicable U.S. Export Administration Regulations (or any successor
supplement or regulations).
-11-
10. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, excluding its conflicts of
law principles. The parties agree that the United Nations Convention on
Contracts for the International Sale of Goods will not apply to this Agreement.
Except for disputes as to the ownership of intellectual property rights in the
Software, all disputes arising out of or relating to this Agreement or its
interpretation shall be finally settled by binding arbitration in Redwood City,
California pursuant to the Commercial Arbitration rules of the American
Arbitration Association by one arbitrator. All arbitrators will have knowledge
of and experience regarding the computer industry. Requests for equitable relief
shall be first submitted to the arbitrator. The arbitration award may be
enforced in any court of competent jurisdiction. Customer hereby consents to the
personal and exclusive jurisdiction and venue of the state and federal courts
located in San Mateo County of the State of California.
11. MISCELLANEOUS. This Agreement constitutes the entire agreement between the
parties with respect to its subject matter, and supersedes any and all written
or oral agreements previously existing between the parties with respect to such
subject matter. Any modifications of this Agreement must be in writing. This
Agreement will bind and inure to the benefit of each party's successors and
assigns, provided that Customer may not assign this Agreement, in whole or in
part, without Liquid Audio's prior written consent. If any provision of this
Agreement is found illegal or unenforceable, it will be enforced to the maximum
extent permissible, and the legality and enforceability of the other provisions
of this Agreement will not be affected. No failure of either party to exercise
or enforce any of its rights under this Agreement will act as a waiver of such
rights. No purchase order, invoice or similar document will by its terms amend
or supplement the terms and conditions of this Agreement, even if accepted or
signed by the receiving party. Performance of this Agreement may be suspended
due to any force majeure event.
CUSTOMER ACKNOWLEDGES THAT IT HAS READ THIS AGREEMENT, UNDERSTANDS IT AND AGREES
TO BE BOUND BY ITS TERMS AND CONDITIONS.
THE SOFTWARE AND THE ACCOMPANYING DOCUMENTATION ARE PROTECTED BY UNITED STATES
COPYRIGHT LAW AND INTERNATIONAL TREATY. UNAUTHORIZED REPRODUCTION OR
DISTRIBUTION IS SUBJECT TO CIVIL AND CRIMINAL PENALTIES.
Rev. ___.
-12-
ATTACHMENT 5
------------
LIQUID MUSIC NETWORK/TM/
------------------------
SYNDICATION LICENSE AGREEMENT
-----------------------------
WHEREAS Liquid Audio, Inc., a California corporation, with offices at 000
Xxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000, hereinafter referred to as
"Liquid Audio," owns and operates the Liquid Music Network (the "LMN"), pursuant
to which Liquid Audio distributes on a syndicated basis an exclusive database of
music programming and other content for public performance and digital delivery
to select Web sites that are licensed as LMN syndication affiliates; and
WHEREAS _________________, a ______ corporation with offices at ________,
hereinafter referred to as "Licensee", wishes to be licensed as a syndication
affiliate of the Liquid Music Network and receive the right to carry the LMN
programming for distribution through Licensee's Web site or sites, upon the
terms and conditions set forth in Schedule "A" to this Agreement;
NOW THEREFORE THE PARTIES HEREBY AGREE AS OF THIS ______ DAY OF __________
199__ ("EFFECTIVE DATE") AS FOLLOWS:
PROGRAMMING CATEGORIES: [All or specify per Schedule "B"]
LICENSED WEB SITES: [insert Licensee URLs]
LICENSE PERIOD: One year from Effective Date
LICENSE GRANTED: Web site redistribution
ANNUAL SYNDICATION FEE: [$ _______ or Based on Programming Categories, per
Schedule "B"]
ADVERTISING REVENUE: 100% retention of Licensee Advertising.
DIGITAL MUSIC COMMERCE REVENUE: Licensee receives Net Revenue from sales.
CD/TANGIBLE MUSIC COMMERCE REVENUE:
Each pays the other X% of any referral fees they receive from third-party sales.
Licensee pays Liquid Audio a [Y% or $ _____] referral fee for sales by Licensee.
MUSICPLAYER & MUSICPLAYER CD: Licensee receives fee for Music Player CD sales =
$ ____
LOGO/ICON LICENSE: Yes
-13-
IN WITNESS THEREOF, the parties hereto have executed this Agreement as of
the date first
above written.
FOR LIQUID AUDIO, INC.: FOR LICENSEE:
BY:________________________ BY:_____________________
TITLE:_____________________ TITLE:__________________
DATE:______________________ DATE:___________________
-14-
SCHEDULE "A"
------------
LIQUID MUSIC NETWORK
--------------------
SYNDICATION LICENSE STANDARD TERMS AND CONDITIONS
-------------------------------------------------
Annexed to and made part of that certain Syndication License Agreement
("Agreement") dated as of ________ 199_, between Liquid Audio, Inc. ("Liquid
Audio") and ______________ ("Licensee").
I. Definitions.
------------
"Licensed Web Sites" means the Web sites owned or controlled by Licensee as
identified by the URLs listed in the Main Agreement.
"Link(s)" means one or more hyperlinks established from within the Licensed Web
Sites to one or more pages within the LMN Site(s), as designated by Liquid
Audio, to enable an end user of the Licensed Web Site to access the LMN
Programming.
"LMN Logo and Artwork" means the logo(s) for the LMN designated by Liquid Audio,
and all artwork, graphics, and other content provided by Liquid Audio for use in
connection with the Links.
"LMN Programming" means the compilation database owned by Liquid Audio and
marketed as the Liquid Music Network, comprised of sound recordings made
available by Liquid Audio in the Programming Categories identified in Schedule
"B" (including forty-five (45) second or less samples of such sound recordings),
and all other graphics, text, video, and other related content now or hereafter
offered by Liquid Audio in connection with the foregoing.
"LMN Site(s)" means the Web site(s) designated by Liquid Audio which operate
Liquid Audio's server and commerce software to deliver the LMN Programming to
LMN end users via the Licensed Web Sites.
"Music Commerce Transactions" means the purchase by an end user who accesses the
LMN Programming via the Licensed Web Sites of (i) one or more intangible copies
of a sound recording offered via the LMN Programming, with online fulfillment of
such sale by digital delivery and downloading from the LMN Sites to the end
user's computer hard drive; and/or (ii) one or more phonorecords offered via the
LMN Programming, including without limitation on compact disc, cassette tape or
other tangible media, with offline fulfillment of the sale made online at the
LMN Site or using a telephone number made available from the LMN Site.
II. License Grant. Subject to the payment by Licensee of the syndication
-------------
license fee set forth in Section IX below, Liquid Audio grants and Licensee
accepts a limited, personal, nontransferable, nonexclusive license as an LMN
syndication affiliate (i) to make available, carry, and distribute the LMN
Programming via the Licensed Web Site(s) to end users; and (ii) subject to
compliance with Liquid Audio's branding guidelines and Section VIII below, to
use the LMN Logo and Artwork as an icon to create one or more Links to the LMN
Site.
III. Reservation of Rights. The license herein granted shall be limited to the
---------------------
rights expressly set forth above. All other rights to the LMN Programming are
expressly reserved by Liquid Audio. Without limiting the foregoing, Licensee may
not sublicense or resell the LMN Programming, and Licensee shall impose no
requirements of any kind or character whatsoever for end users to access the LMN
Programming via the Links, including without limitation, any subscription or
access fee or registration requirement to activate the Link to the LMN
Programming.
IV. Joint Promotional Obligations Liquid Audio and Licensee will each promote
-----------------------------
the other and the relationship described within this Agreement at any
appropriate trade shows. Liquid Audio and Licensee will jointly release a press
release concerning the relationship described in this Agreement. Both parties
will agree to the language of the press release before it is issued.
V. Liquid Audio Obligations Liquid Audio will include Licensee on the LMN Site
------------------------
in an area in which Liquid Audio describes the LMN, and Liquid Audio will
provide a link from this portion of its site to Licensee's home page. In
connection with the distribution of the LMN Programming via the Licensed Web
Sites, Liquid Audio intends to enable end users (i) to preview a performance of
a sample of one or more sound recordings, (ii) to engage in Music Commerce
Transactions, and (iii) to download a copy of the then-current Liquid Audio
standard player software. Liquid Audio acknowledges that Liquid Audio and its
designees, and not Licensee, will be solely responsible for enabling the
foregoing functionality with Liquid Audio's technology and any third party
technology obtained by Liquid Audio, including without limitation all aspects of
online and offline fulfillment and processing of Music Commerce Transactions.
Notwithstanding the foregoing, where appropriate with respect to physical CD
products, Liquid Audio will consider utilizing any preferred vendor and/or
fulfillment source for these transactions and fulfillment designated by
Licensee, provided that such preferred vendor carries the appropriate inventory
to fulfill orders as reasonably required by Liquid Audio, and subject to
implementation of the appropriate technology within the LMN by Liquid Audio.
Licensee acknowledges that pricing and all other matters relating to Music
Commerce Transactions will be solely determined by Liquid Audio and/or its
licensors.
-15-
VI. Syndication Affiliate Obligations. In consideration of the exclusive
---------------------------------
nature of the LMN Programming offered to Licensee hereunder, the foregoing
license requires that the LMN Programming be featured in a premiere position on
the Licensed Web Sites, which shall include at minimum (i) placement of the LMN
Logo as a Link on the "home page" of the Licensed Web Sites, or if no third-
party content appears on the "home page" then in the first page thereafter that
does so (and/or on other mutually agreed pages of sufficient prominence); (ii)
the most prominent placement on all other guides to content on the Licensed Web
Sites as compared to other music-related programming, including without
limitation on the "What's New" or similar pages, on any topical listing of
content available on such site. Licensee agrees that it will use Liquid Audio's
technology as the exclusive audio downloading and audio commerce technology on
the Licensed Web Sites.
VII. Liquid MusicPlayer and Liquid MusicPlayer CD. Licensee will provide a
--------------------------------------------
download button, in a design consistent with Liquid Audio's branding guidelines,
on the Licensed Web Sites, that enables end users to download the Liquid
MusicPlayer from the Web site. Liquid Audio will license the Liquid MusicPlayer
directly to the end user. Liquid Audio will be responsible for all customer
support of this product. In addition, Licensee will actively promote the sale of
the Liquid MusicPlayer CD on the Licensed Web Sites. Liquid Audio will be
responsible for the fulfillment of the orders of the Liquid MusicPlayer CD from
the Licensed Web Sites as a Music Commerce Transaction under this Agreement.
Liquid Audio will license the Liquid MusicPlayer CD directly to the end user.
Liquid Audio will be responsible for all customer support of this product.
Liquid Audio will provide to Licensee separate Web pages, for inclusion within
the Licensed Web Sites, which explain the relevant aspects of the Liquid Audio
system, and especially the Liquid MusicPlayer and the Liquid MusicPlayer CD.
VIII. Advertising. Upon execution of this Agreement, Licensee agrees to commence
-----------
insertion of banner advertising on the Licensed Web Sites announcing the coming
of the LMN. Liquid Audio will work with Licensee to design these banner ads.
Upon launch of the LMN on the Licensed Web Sites, Licensee may create and
maintain for its own account a frame that surrounds the LMN Programming for end
users who access the LMN via the Licensed Web Sites. With respect to such frame,
Licensee shall have the right to independently sell advertising for such frame
and shall retain for its own account all advertising revenue derived therefrom.
Notwithstanding the foregoing, Liquid Audio will be responsible for the final
approval of the framing space and shall have the right to finally resolve any
advertising booking conflict or to veto any advertising that is competitive with
Liquid Audio or the LMN. With respect to the page(s) on the Licensed Web Sites
which contain the Link(s) to the LMN Programming, Licensee shall also control
all advertising and other content on such page, and shall retain all revenue
derived therefrom, provided that no such advertising or content shall be placed
in direct relation to the Link such as to cause dilution or consumer confusion
with respect to the association of the Link to such advertising or content.
Liquid Audio shall control all other aspects of the LMN Programming, including
without limitation any advertising or promotional activities contained therein,
and shall retain any and all revenue derived from such advertising and
promotional activities. Each party shall be responsible for serving its own
advertising hereunder, and as such, neither party shall be obligated to report
tracking or usage data for advertising purposes hereunder.
IX. Payments.
---------
(a) Licensee shall pay Liquid Audio the annual syndication license fees
for the Programming Categories selected by Licensee as set forth in Exhibit "B".
The parties agree that timely payment of all license fees by Licensee is of the
essence of this Agreement, and any failure by Licensee to make such timely
payment shall constitute a material default hereunder. Any payment hereunder not
made within thirty (30) days after due date shall bear interest at the rate of
1% per month or the maximum rate allowed by law, whichever is less.
(b) With respect to Music Commerce Transactions involving distribution via
digital delivery, Liquid Audio shall pay to Licensee the Net Revenue derived
from sales. "Net Revenue" means the actual retail sales price paid by the
customer for the applicable track(s) sold (if different than list price), less
any sales tax included therein, the wholesale price of the applicable track(s)
sold, Liquid Audio's digital fulfillment fee, bank transaction processing fees,
[and any applicable mechanical rights fees that may not be included within the
wholesale price]. The parties acknowledge that Liquid Audio will determine the
list and actual retail selling price to customers in its sole discretion, unless
otherwise agreed, and that the record label or other content owner will
determine the wholesale price in its sole discretion.
(c) With respect to sales of the Liquid MusicPlayer CD, Liquid Audio shall
pay Licensee a fee for each sale as set forth in the Main Agreement.
(d) With respect to Music Commerce Transactions involving distribution on
CDs and other tangible media, Liquid Audio shall pay to Licensee the following:
(i) where Licensee is not the vendor and does not have a preferred vendor
arrangement, the applicable percentage of Liquid Audio's referral fees, as set
forth in the Main Agreement, received from any preferred vendor arrangement
maintained by Liquid Audio.
(e) With respect to Music Commerce Transactions involving distribution on
CDs and other tangible media, Licensee shall pay to Liquid Audio the following:
(i) where Licensee is the vendor, the applicable referral fee, as set forth in
the Main Agreement, and (ii) where Licensee is not the vendor but has a
preferred vendor arrangement, the applicable percentage of Licensee's referral
fees, as set forth in the Main Agreement, received from such preferred vendor.
(f) Subject to the foregoing, the parties' sole compensation under this
Agreement shall be the mutual benefit derived from
-16-
offering the LMN Programming on the Licensed Web Sites and each party shall
retain all revenues derived from their respective activities, including without
limitation, all advertising revenue derived by each party pursuant to Section
VIII above.
X. Statements. Each party shall provide the other party with a statement of
----------
any amount payable arising from Music Commerce Transactions and shall tender the
appropriate amount due to the other party within thirty (30) days after the end
of each calendar month; provided, however, that any total amount payable that is
less than $100 may be retained until the aggregate amount payable equals or
exceeds $100. The statement shall contain sufficient information for the other
party to accurately verify the amounts due and payable, including (i) the net
amount of any referral fees, the calculation of such net amount, and the source
of any referral fees, and (ii) for direct sales, the sale price, the quantity
sold, the gross receipts generated, and an itemization of the permitted
deductions, if any. Liquid Audio reserves the right to suspend payments to
Licensee hereunder in the event of any delay, failure or incompleteness by
Licensee in its payment or reporting obligations hereunder.
XI. Warranties. Liquid Audio warrants that it is the sole owner of the LMN
----------
Programming compilation database, and except with respect to public performance
of music works which is provided for in Section XII below, it has all rights
necessary to license the LMN Programming as provided herein. Subject to the
performance by Licensee of its obligations hereunder, Liquid Audio will
indemnify Licensee against any damages awarded in any final judgment entered
against Licensee or settlement approved by Liquid Audio, as a result of a breach
of any warranty made by Liquid Audio hereunder or by reason of a claim that the
exercise by Licensee of the rights granted herein infringes the rights of
others, provided, however, prompt detailed notice in writing of such claim is
provided to Liquid Audio. Liquid Audio shall have full control over the defense
and/or settlement of any such claim or litigation including the right to engage
its own counsel and Licensee shall not continue the distribution of such LMN
Programming thereafter without the written consent of Liquid Audio. Licensee
shall cooperate fully with Liquid Audio in the defense or settlement of any such
claim or litigation. Licensee will indemnify Liquid Audio from all claims or
liabilities including without limitation reasonable attorneys' fees arising from
the breach of this Agreement by Licensee or from the distribution of any
material on the Licensed Web Sites other than material contained in the LMN
Programming as delivered by Liquid Audio.
XII. Music Rights. Liquid Audio warrants to the best of its knowledge that the
------------
public performance rights in the musical works contained in the LMN Programming
are (i) controlled by ASCAP, BMI, SESAC or a performing rights society having
jurisdiction, (ii) in the public domain, or (iii) controlled by Liquid Audio or
its licensors. If musical works in category (iii) above are contained in the LMN
Programming, a limited public performance license is deemed to be included
within the scope of the license set forth in Section lI above. If musical works
in category (i) above are contained in the LMN Programming, Licensee shall
contact BMI, ASCAP or the appropriate public performing rights organization to
obtain a license covering the uses contemplated by this Agreement, which may
include any preferred rates that may now or hereafter be negotiated by Liquid
Audio on behalf of its syndication licensees. Licensee at its sole cost and
expense shall be responsible for obtaining all licenses necessary to perform
such musical works, and Licensee agrees to indemnify Liquid Audio against any
liability loss or expenses arising form the performance of such musical works
via the Licensed Web Sites without such a license.
XIII. Withdrawal and Substitutions. Liquid Audio may in its absolute discretion
----------------------------
withdraw permanently or temporarily any licensed sound recording or other
content from the LMN Programming if Liquid Audio determines in its sole
discretion that the distribution thereof would or might infringe the rights of
others, violate any law or governmental rule or regulation, interfere with
actual or contemplated use of the particular licensed LMN Programming for any
purpose other than the distribution by Licensee or subject Liquid Audio to any
potential liability or litigation. In the event any part of the LMN Programming
is withdrawn on a temporary basis or permanent basis, Licensee shall be entitled
to delivery of substitute LMN Programming designated by Liquid Audio of
comparable quality.
XIV. Term and Termination.
---------------------
(a) This Agreement will become effective on the Effective Date and shall
continue in effect for the period set forth in the Main Agreement unless
otherwise terminated or canceled as provided herein. This Agreement shall
automatically renew for one or more renewal terms of one (1) year each at the
end of the initial term of any renewal term unless either party tenders written
notice of its intent to terminate at least thirty (30) days prior to the
scheduled expiration date.
(b) Either party hereto may, at is option, and without notice, terminate
this Agreement, effective immediately, should the other party hereto (i) admit
in writing its inability to pay its debts generally as they become due; (ii)
make a general assignment for the benefit of creditors; (iii) institute
proceedings to be adjudicated a voluntary bankrupt, or consent to the filing of
a petition of bankruptcy against it; (iv) be adjudicated by a court of competent
jurisdiction as being bankrupt or insolvent; (v) seek reorganization under any
bankruptcy act, or consent to the filing of a petition seeking such
reorganization; or (vi) have a decree entered against it by a court of competent
jurisdiction appointing a receiver liquidator, trustee, or assignee in
bankruptcy or in insolvency covering all or substantially all of such party's
property or providing for the liquidation of such party's property or business
affairs.
(c) In the event that either party commits a material breach of its
obligations hereunder, the other party may, at its option, terminate this
Agreement, by thirty (30) days written notice of termination, which notice shall
identify and describe the basis for such termination; provided, however, that
if, prior to expiration of such period, the defaulting party cures such default,
termination shall not take place.
-17-
(d) Upon any termination of this Agreement, Sections III and XV shall survive
the termination of this Agreement. Licensee shall immediately return to Liquid
Audio all copies of the LMN Logo and Artwork and all other Liquid Audio
materials in Licensee's possession or control. Licensee shall deactivate all
Links to the LMN Sites and shall not create any links thereto without the prior
consent of Liquid Audio.
XV. Confidential Information
------------------------
(a) Each party acknowledges that by reason of its relationship to the
other party under this Agreement it will have access to certain information and
materials concerning the other party's business, plans, customers, technology
and products that are confidential and of substantial value to such party
(referred to in this Section as "Confidential Information"), which value would
be impaired if such Confidential Information were disclosed to third parties.
The terms of this Agreement shall be deemed to constitute the Confidential
Information of Liquid Audio. Each party agrees to maintain all Confidential
Information received from the other, both orally and in writing, in confidence
and agrees not to disclose or otherwise make available such Confidential
Information to any third party without the prior written consent of the
disclosing party. Each party further agrees to use the Confidential Information
only for the purpose of performing this Agreement. No Confidential Information
shall be deemed confidential unless so marked if given in writing or, if given
orally, identified as confidential orally prior to disclosure and confirmed in
writing within thirty (30) days; provided, however, that Licensor agrees that
any Confidential Information in whatever form relating to the design,
functionality, operational methods or coding of Liquid Audio software, including
but not limited to any complete or partial source or object code versions of
such software, shall be deemed Confidential Information of Liquid Audio
regardless of the presence or absence of any confidential markings or
identification.
(b) The parties' obligations under this Section XV shall not apply to
Confidential Information which: (i) is or becomes a matter of public knowledge
though no fault of or action by the receiving party; (ii) was rightfully in the
receiving party's possession prior to disclosure by the disclosing party; (iii)
subsequent to disclosure, is rightfully obtained by the receiving party from a
third party who is lawfully in possession of such Confidential Information
without restriction; (iv) is independently developed by the receiving party
without resort to the disclosing party's Confidential Information; or (v) is
required by law or judicial order, provided that prior written notice of such
required disclosure is furnished to the disclosing party as soon as practicable
in order to afford the disclosing party an opportunity to seek a protective
order and that if such order cannot be obtained disclosure may be made without
liability. Whenever requested by a disclosing party, a receiving party shall
immediately return to the disclosing party all manifestations of the
Confidential Information or, at the disclosing party's option, shall destroy all
such Confidential Information as the disclosing party may designate. The
receiving party's obligation of confidentiality shall survive this Agreement for
a period of five (5) years from the date of its termination, and thereafter
shall terminate and be of no further force or effect.
XVI. Additional Provisions.
----------------------
(a) Licensee acknowledges that each music offering included in the LMN
Programming category or categories was individually licensed and separately
priced, and that Liquid Audio offered each music offering without discrimination
and without conditioning the licensing of any one music offering upon the
licensing of any other music offering.
(b) Neither party shall be liable to the other for any delay in delivery
or inability to distribute the LMN Programming due to acts of God, failure of
carriers, labor disputes, failure or delay in software encoding, war, public
disaster or any other cause beyond the control of the parties and such
performance shall be excused to the extent of such force majeure event.
(c) Licensee shall pay without imitation any tax, levy or charge
whatsoever by any statute, law, rule or regulation now or hereafter in effect,
related to the license fees payable under this Agreement, it being the intent
hereof that the license fees herein shall be a net amount, free and clear any
such taxes, levy or charges whatsoever, except for any taxes on Liquid Audio's
net income.
(d) Neither the license granted to Licensee hereunder nor this Agreement
may be assigned by Licensee without the prior written consent of Liquid Audio,
nor shall Licensee sublicense or relicense any of the LMN Programming licensed
hereunder, or enter into any third-party linking arrangements with respect
thereto without Liquid Audio's prior written consent. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns.
(e) The headings of paragraphs hereof are inserted only for the purpose of
convenient reference; such headings shall not be deemed to govern, limit,
modify, or in any manner affect the scope, meaning or intent of the provisions
of this Agreement or any part or portion thereof; nor shall they otherwise be
given any legal effect.
(f) Nothing herein contained shall constitute a franchise relationship, or
partnership between ,or joint venture by, Licensee and Liquid Audio, or
constitute Licensee or Liquid Audio the agent of the other.
(g) All notices hereunder will be hand delivered or sent by certified or
registered mail to the parties at the addresses set forth above, or to such
other addresses as may be designated by the parties in writing. A mandatory copy
of all notices delivered or sent to Liquid Audio shall be sent to Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx 00000-0000,
Attention: Xxxx Xxxxx, Esq.
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(h) This Agreement shall be construed in accordance with the applicable
laws of the State of California with respect to agreements executed and to be
fully performed in that state.
(i) This Agreement represents the entire understanding of the parties and
shall not be amended or modified except in writing signed by both parties
hereto; nor may any provision hereof be waived unless in writing signed by the
party to be charged with such waiver.
(j) If there is a conflict between any provision(s) of this Agreement and
any statute, law or regulation, the statute, law or regulation, shall prevail,
provided, however, that in such event the provision(s) of this Agreement so
affected shall be curtailed and limited only to the minimum extent necessary to
permit compliance with the minimum requirement of such statute, law or
regulation, and no other provisions of this Agreement shall be affected thereby
and all such other provisions shall continue in full force and effect.
(k) Licensee agrees that any litigation, action or proceeding arising out
of or relating to this Agreement shall be instituted in any state or federal
court sitting in the Northern District of California, and Licensee waives any
objection to such venue, irrevocably submits to such jurisdiction and waives any
claim or defense of inconvenient forum.
(1) In no event shall Liquid Audio be liable for consequential,
incidental, special, reliance or indirect damages, however caused, on any theory
of liability, and whether or not Liquid Audio has been advised of the
possibility of such damages.
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SCHEDULE "B"
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LMN Programming Syndication Categories License Fees
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All Categories
Pop/R&B
Country
Rock
Jazz
Classical
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