EXHIBIT 10.8
LA AGREEMENT BETWEEN REALNETWORKS AND LIQUID AUDIO
This Agreement is entered into as of April 26, 1998 (the "Effective Date") by
and between Real Networks, Inc., a Washington corporation ("RN"), and Liquid
Audio, Inc. a California corporation ("LA").
WHEREAS, RN has developed and owns all right, title and interest in the
RealMedia Architecture ("RMA", as further defined below), an open platform for
development of streaming media applications and tools, which allows software
developers to build new applications and extend current applications to inter-
operate with a wide variety of datatypes; WHEREAS, LA is a developer of high
quality audio codec and datatypes. LA desires to modify and enhance its products
or develop new products based on RN's Real Media Architecture that are
interoperable with the Licensed Software (as defined below).
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 "License Key" means the authorization code that is generated by the License
Key Tool and that enables RMA Server Software to stream RealMedia
datatypes. License Keys that generate User-Streams and enable features of a
LA Product are provided to a LA's end-user customers.
1.2 "License Key Tool" means the version of the License Key Tool that is
provided to LA by RN that is specific and unique to the applicable LA
Product. The License Key Tool is used to generate unique License Keys for a
LA Product.
1.3 "Licensed Software" means Real Players, the RealMedia SDK, including
associated RealMedia Libraries, RMA Server Software, whether in object code
or source code form, License Key Tools and License Keys, and related User
Documentation and specifications.
1.4 "New Release" means a new major release of the Licensed Software or the LA
products in which major new functionality has been added in addition to any
complement of bug fixes supplied, and which is designated as a change in
the digit to the left of the decimal point in the product version number
[(x).x.x]. "Update" means a minor release, enhancement, revision,
modification or upgrade of the Licensed Software Software or LA Products,
designated as a change in the tenths digit in the product version number
[x.(x).x], or in the digit to the right of the tenths digit in the product
version number [x.x.(x)]. By way of clarification, if either party markets
a new and distinct product along with and in addition to an existing
program, then such new and distinct product shall be treated as a New
Release, not an Update.
1.5 "LA Product(s)" means the products and applications developed by LA
hereunder incorporating the Licensed Software which are compatible with RMA
Server Software, as further described on Exhibit A hereto. LA Products
shall include:
(a) "LA Client Software," which means software that is incorporated in an
RMA Player and utilizes the RMA application programming interfaces
("APIs") and will not interoperate with any server software, other
than an RMA server, that streams files by any RMA supported protocol;
(b) "LA Tools," which means software tools that may import datatypes and
export datatypes using the RealMedia Libraries; and
(c) "LA Server Applications," which means LA software applications that
interface with RMA Server Software and add datatypes that can be
streamed from RMA Server Software.
1.6 Reserved.
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1.7 "RealMedia Architecture" or "RMA" means the software platform developed by
RN that allows for the development of streaming media products and tools,
and which is designed specifically for the existing infrastructure of the
Internet and corporate intranets. RMA includes the following components:
(a) "Real Players," which are stand-alone applications, or components
embedded in other applications, that play RMA media files.
(b) "RealMedia Datatypes," which are datatypes that can be streamed using
RMA Server Software APIs and played using RMA Player APIs.
(c) "RealMedia Libraries," which are APIs contained in the RealMedia SDK
in object code form.
(d) "RealMedia SDK" or "SDK," which contains the tools and information
needed for software developers to create tools for use in producing
streaming media and to adopt or build applications that stream from
RMA Server Software and play in Players. The SDK contains a Player,
Player APIs, Server APIs, RealMedia Libraries, Sample Source Code and
RealMedia Server Software.
(e) "RMA Server Software" which is software in object code form, which
streams files over networks, and which has the capabilities set forth
on Exhibit B hereto.
(f) "Sample Source Code," which provides an example of how to develop an
RMA application.
1.8 "Term" is defined in Section 8.1.
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1.9 "Territory" means the world, except as otherwise limited by Section 14.7.
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1.10 "User Documentation" means RN's user manuals, technical manuals, release
notes including advertisements for RMA Server Software, installation and
operation instructions, and other data and documentation describing the use
of RMA Server Software normally supplied to RN's customers.
1.11 "User-Stream" means the stream of Real Media datatypes from RMA Server
Software to a single end-user client computer. The number of User-Streams
being delivered by a single copy of the RMA Server Software is measured by
counting the number of end-users simultaneously served by User-Streams
originating from the RMA Server Software.
2. LA DEVELOPMENT OF RMA-BASED PRODUCTS AND INTEGRATION; LICENSE TO LA OF RMA
SDK FOR DEVELOPMENT
2.1 License; LA Development and Integration. Subject to the terms and
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conditions of this Agreement, RN grants to LA a non-exclusive,
nontransferable license to use and install the RealMedia SDK for the sole
purpose of developing and using LA Products that are based upon the RMA
Architecture and interoperate with Licensed Software. Subject to Section
14.9 below, LA agrees that by September 30, 1998, LA shall have developed
commercially shippable versions of the LA Client Software and LA Server
Application. LA shall only use the SDK on a single computer or on a
computer network. LA may make a single copy of the SDK for back-up and
archival purposes only, provided that any copy must contain all proprietary
notices included in the original. LA may download associated online
documentation for purposes of using the SDK, but may not make further
copies of the documentation.
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2.2 Limitations.
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(a) The SDK may be used solely to develop and test a LA Product. It may
not be used for any commercial, non-commercial, educational or
internal purpose, and may not be used in any way that allows or causes
the transmission of audio, video or other media files across the
Internet to any computer network without a separate written license
agreement from RN.
(b) LA is expressly prohibited from using, licensing, selling,
transferring or otherwise distributing any LA Product except as
expressly provided in this Agreement.
(c) Except as expressly provided herein, LA shall not copy, modify,
reproduce, display, decompile, reverse engineer, store, translate,
sublicense, assign, sell, lease or otherwise transfer or distribute
the SDK, or any of its rights therein, in whole or in part, nor may LA
use the SDK to clone any client, server or other RN product. All
rights not specifically granted herein to LA are reserved to RN.
(d) Nothing contained in this Agreement shall be deemed or construed to
grant LA the exclusive right to develop, or have distributed by RN, LA
Products for any particular category of datatypes.
3. DISTRIBUTION LICENSES; OBLIGATIONS CONCERNING LA PRODUCTS AND LICENSED
SOFTWARE
3.1 License from RN to LA. Subject to the terms and conditions set forth in
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this Agreement, RN grants LA the following licenses:
(a) LA Client Software. Except as provided in Section 4.1(b), LA agrees
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that it shall not, under any circumstances, distribute any LA Client
Software without a separate written license agreement with RN, during
or after the Term. All LA Client Software shall be distributed by RN
in accordance with Section 3.2(a). Notwithstanding the foregoing, LA
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may include a link offering or promoting the LA Client Software from
the LA website to a hidden link on a RN website from which the LA
Client Software will be downloadable, and may promote the LA Client
Software on LA's website.
(b) LA Tools; LA Server Applications. RN grants LA a non-exclusive,
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non-transferable license to market, promote and distribute LA Server
Applications and LA Tools containing any Licensed Software in the
Territory during the Term. RN hereby grants LA the non-exclusive,
royalty-free, non-transferable right and license to use and publicly
display the RMA Server Software and Real Players for internal,
demonstration and marketing purposes. LA shall not modify, decompile,
or reverse engineer the RMA Server Software or Real Players during or
after the Term.
(c) Limitations; Requirements. LA's end-user license agreements for the LA
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Products shall prohibit further distribution, independently of the LA
Products, the RMA Libraries, any RMA files or other components of RMA
by LA's end-users.
(ii) LA shall include a prominent and valid copyright notice, in the
form reasonably requested by RN, in LA Products specifying that
components of LA's Products are owned by and used under license
from RN and its suppliers. LA shall not alter or remove any
copyright or trademark notices contained in any Licensed
Software or User Documentation. In addition, LA shall
prominently display RN's "RMA logo" and the words "RMA
Compatible" on the product packaging and all product manuals
and documentation, in accordance with the terms of Section 5.1.
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(iii) LA shall ensure that the LA Products interoperate properly and
are compatible with the RMA Server Software. RN may elect to
test the LA Products or, at RN's option, will have the LA
Products tested by a third party testing lab at RN's expense,
to confirm that the LA Products interoperate properly and are
compatible with the RMA Server Software.
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(iv) LA shall promptly deliver to RN all releases, including beta
releases, of its LA Products, for use by RN as set forth in
Section 3.2.
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3.2 Distribution By RN.
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(a) LA Client Software. [*] In the event that RN secures a distribution
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arrangement with an OEM or other distributor that necessitates the LA
Client Software be compiled or "ported" to run on a third-party
platform, the parties will negotiate in good faith and cooperate as
reasonably necessary to enable such arrangement. Notwithstanding the
foregoing, neither party shall be in breach of this Agreement if such
negotiations are unsuccessful. Notwithstanding anything to the
contrary set forth in this Agreement, LA shall have no obligation
hereunder with respect to the LA Client Software after the Term.
(b) LA Tools; LA Server Applications. LA hereby grants RN the non-
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exclusive, non-transferable right and license to market, promote and
distribute, by itself or through authorized distributors, the LA Tools
and LA Server Applications, in the Territory during the Term by any
means and in all channels of distribution, including as follows:
(i) RN will electronically distribute the LA Tools and LA Server
Applications from RN's Real Store, provided that they meet the
requirements for inclusion in the Real Store, and that RN and LA
sign an Electronic Distribution Agreement acceptable to both
parties.
(ii) LA hereby grants RN the non-exclusive, royalty-free, non-
transferable right and license to use and publicly display the LA
Tools and LA Server Applications for internal, demonstration and
marketing purposes., RN shall not modify, decompile, or reverse
engineer the LA Products during or after the Term.
(c) LA shall provide to RN LA's standard end user license agreement
embedded in LA's installation program for distribution by RN and its
Authorized Distributors along with LA's Products. The license granted
in such end-user license agreement shall be between LA and RN's end-
users.
3.3 Source Code Escrow, LA will deposit with Data Securities International,
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Inc. (the "Escrow Agent"), a complete and correct set of the source and
object code version of the LA Client Software (the "Escrow Products") and
shall enter into the Escrow Agent's Master Preferred escrow agreement,
pursuant to which RN shall have the right to require that the Escrow Agent
provide some or all of the Escrow Products to RN or third parties in the
event that LA undertakes or is subject to any of the actions set forth in
Section 8.2(b); or in the event that it is of LA's breach of this Agreement
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(other than a breach of Section 2.1) as determined by an arbitrator
pursuant to Section 14.6 hereof or as adjudicated by a court having
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jurisdiction over LA. RN shall pay any required escrow fee directly to the
Escrow Agent. In the event that the source code is released to RN, RN shall
use such source code only to support the LA Client Software then being
distributed by RN, and for no other purpose.
4. DISTRIBUTION OF RMA SERVER SOFTARE.
4.1 Grant of License. Subject to the terms and conditions of this Agreement,
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and payment of the License Fees set forth in Section 6.1, RN grants LA a
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non-exclusive, non-transferable right and license, in the Territory during
the Term, to:
(a) market, license and distribute object code copies of the RMA Server
Software and User Documentation to end-user customers only in
conjunction with both a LA Product and LA's electronic music
distribution and commerce server
* 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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("Music Server") and only for use in connection with the distribution
of sound recordings to end-user clients for a xxx or for promotional
purposes.
(b) license and distribute one copy of the LA Client Software with each
copy of the RMA Server Software distributed to an end-user customer;
(c) generate License Keys with an authorized, RN-provided License Key
Tool, and duplicate, market and distribute License Keys associated
with LA Product to LA's authorized resellers and distributors
("Authorized Distributors") and end-user customers;
(d) sublicense to Authorized Distributors the right to market, license and
distribute object code copies of the RMA Server Software, User
Documentation and License Keys to end-user customers only in
conjunction with both a LA Product and LA's electronic music
distribution and commerce server ("Music Server") and only for use in
connection with the distribution of sound recordings to end-user
clients for a fee or for promotional purposes; and
(e) determine the price at which LA and its Authorized Distributors will
license and distribute the LA Products, RMA Server Software and
License Keys to end-user customers, independent of any License Fee
payable by LA to RN.
4.2 Distribution Requirements.
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(a) End User License Agreements. LA shall distribute and shall cause its
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Authorized Distributors to distribute to their end-user customers RN's
standard end-user Server Software License Agreement, which is
contained in RN's product packaging. The license granted in such end-
user license agreement shall be between RN and LA's end-users.
Accordingly, LA agrees that it shall promptly provide to RN the names
and addresses of all end-users to whom LA or its Authorized
Distributors distributes an RMA Server Software concurrently with the
provision of monthly reports, as set forth in Section 7.2.
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(b) Fulfillment for RMA Servers Software. LA may either: (i) download RMA
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Servers from a private RN download site; or (ii) place an order with
RN for physical pre-packaged copies of the RMA Server Software. RN
will ship all physical product to LA or LA's authorized designee, by
shipment method specified by LA. All orders are shipped F.O.B. RN's
designated fulfillment location. As a convenience, RN may prepay
freight charges, and such charges will be billed to LA. All risk of
loss or damage in transit will be borne by LA. LA shall inspect the
RMA Server Software upon receipt at the delivery location. Acceptance
shall be deemed to occur unless LA provides RN with notice of non-
acceptance within three (3) days of receipt. A LA may only reject a
copy of RMA Server Software for one of the following reasons: (i)
missing labels or User Documentation, or (ii) defective media.
(c) Trademark Usage. If LA distributes the RMA Server Software as part of
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a bundle, LA shall prominently display RN's "RMA logo" and the words
"RMA Compatible" on the product packaging and all product manuals and
documentation, in accordance with any Section 5.1.
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5. TRADEMARK LICENSE.
5.1 LA shall have the right, but not the obligation except as expressly
provided herein, to use RN's trademarks and logos, royalty-free, in
connection with LA's user interfaces, packaging, collateral material and
website, subject to compliance with RN's Trademark Usage Guidelines, or as
otherwise designated in writing by RN from time to time, provided each such
use is approved by RN in writing in advance as follows: LA shall furnish RN
with samples of any proposed usage of such trademark or logo, and obtain
RN's prior approval for such usage, which approval will not be unreasonably
withheld or delayed.
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5.2 RN shall have the right to use LA's "Liquid Audio" trademark and logo in
connection with RN's user interfaces, packaging, collateral material and
website, subject to compliance with LA's Trademark Usage Guidelines, or as
otherwise designated in writing by LA from time to time, provided each such
use is approved by LA in writing in advance as follows: RN shall furnish LA
with samples of any proposed usage of such trademark or logo, and obtain
LA's prior approval for such usage, which approval will not be unreasonably
withheld or delayed.
6. SUPPORT AND UPGRADES.
6.1 Technical Support for LA Products. During the Term, LA shall be solely
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responsible for providing, and agrees that it will provide, all end-user
technical and customer support for the LA Products.
6.2 Technical Support for RMA Server Software. During the Term, LA agrees that
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it will provide first-tier technical and customer support, by telephone and
e-mail and in accordance with RN's minimum support requirements, for RMA
Server Software distributed by LA and its Authorized Distributors. RN will
enroll LA, without charge, in a one-day RealMedia technical training
seminar at RN's facilities, to train LA to provide first-line technical
support to its end-user customers for RMA Server Software. LA shall be
responsible for all out-of-pocket costs in incurs to attend such seminar.
RN shall provide second-tier technical support, by telephone and email,
from 8:00 A.M-5:00 P.M. PST Monday through Friday to LA's primary support
contact for RMA Server Software. RN's telephone "hotline" shall be staffed
by technical personnel with a working knowledge of the RMA Server Software.
RN shall not provide technical support to LA's Authorized Distributors or
end-users, unless such customers purchase technical support service from RN
directly.
6.3 LA Updates and New Releases. During the Term, LA shall make available to RN
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at no charge, upon release by LA, a copy of all Updates and New Releases to
the LA Products. Each Update or New Release shall, upon release by LA, be
subject to all of the terms and conditions of the Agreement.
6.4 RN Updates and New Releases. During the Term, RN shall make available to LA
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at no charge, upon release by RN, a copy of all corresponding Updates on
the RN website. RN shall make available at no charge all New Releases and
all Updates associated with developments of LA Products. Each Update or New
Release shall, upon release to LA, be subject to all of the terms and
conditions of the Agreement.
7. PAYMENT
7.1 License Fee. As consideration for the RMA Server Software distribution
rights granted herein, LA shall pay RN a license fee ("License Fee") of [*]
licensed by LA hereunder. License Fees for User Streams are [*]
7.2 Payment Terms. LA will provide RN with a written report by the 20th day of
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each month for the preceding calendar month setting forth: (a) the number
of RMA Server Software distributed, (b) the names and address to whom the
RMA ServerSoftware was distributed; (c) the number of License Keys
distributed; and (d) the amount due to RN pursuant to Section 7.1 for the
preceding month. The report shall be accompanied by the payment due. All
payments due hereunder shall be made in United States Dollars, without
withholding or offset of any kind. Interest shall accrue on all amounts
past due hereunder at the monthly rate of one and one-half percent (1.5%)
or at the maximum legal rate, whichever is less.
7.3 Books and Records. During the Term and for three (3) years thereafter, LA
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shall keep books of account with respect to the amounts due and the
calculations required to be made under Section 7.1. Upon RN's reasonable
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written request, and no more than once per year of the Term, RN may audit
and inspect all such books of account, through an independent third party
auditor and during normal business hours, provided that such
* Certain information in this Exhibit has been omitted and filed
seperately with the Commission. Confidential treatment has been
requested with respect to the omitted portions.
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auditor is a nationally recognized firm of certified public accountants and
shall undertake in writing to protect the confidentiality of the business
data and records of LA. The cost of any such audit shall be paid by RN.
provided, however, that in the event RN initiates an audit under this
Section 7.3 and it is finally determined that the amount reported and paid
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by LA pursuant to Section 7.1 for the period(s) audited is, in the
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aggregate, less than ninety-five per cent (95%) of the aggregate amount
actually due, then LA shall pay the reasonable costs and expenses of said
audit. If any such audit reveals an underpayment of license fees, LA shall
make any correcting payment within thirty (30) days. Any underpayment shall
be subject to interest of one and one-half percent (1.5%) per month or the
maximum amount allowed by law, whichever is less. LA will maintain the
books and records applicable to each reporting period for at least three
years following the close of such period.
7.4 Audit of Authorized Distributors. During the Term and for three (3) years
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thereafter, For all Authorized Distributors, LA, in its sole discretion,
shall either: (a) retain for itself the right to audit the books and
records of any such Authorized Distributor; or (b) require that the
Authorized Distributor agree in writing to permit, upon the written request
of RN to LA, an independent auditor paid by RN to examine the necessary
books and records of any such Authorized Distributor, provided that such
accountant shall agree to protect the confidentiality of the business data
and records and to disclose to RN only the accuracy or inaccuracy of the
reporting required hereunder. Any such audits shall be arranged through LA.
LA shall require its Authorized Distributors to maintain books and records
applicable to LA's payment obligations hereunder for at least three years
following the close of the applicable reporting period for such
obligations.
8. TERM AND TERMINATION
8.1 Term. This Agreement shall commence as of the Effective Date, and terminate
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one (1) year from the Effective Date (the "Term"), unless earlier
terminated as provided herein.
8.2 Termination by Either Party. Either party may terminate this Agreement
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immediately upon written notice to the other party in the event of any of
the following:
(a) should the other party fail to perform any material term or condition
of this Agreement, which shall constitute a default of this Agreement,
and such default has not been corrected within thirty (30) days of
notice from the non-breaching party. In the event of a breach of
Section 9 no cure period need be provided.
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(b) should the other party (i) make a general assignment for the benefit
of creditors; (ii) institute proceedings to be adjudicated a voluntary
bankrupt, or consent to the filing of a petition of bankruptcy against
it; (iii) be adjudicated by a court of competent jurisdiction as being
bankrupt or insolvent; (iv) seek reorganization under any bankruptcy
act, or consent to the filing of a petition seeking such
reorganization; or (v) 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, provided such decree is not
dismissed within 45 days.
8.3 Termination by RN or LA. RN may terminate this Agreement immediately upon
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written notice to LA in the event of any attempted transfer or assignment
of this Agreement or any right or obligation hereunder (except as provided
in Section 14.3), or any sale, transfer, relinquishment, voluntary or
involuntary, by operation of law or otherwise, of more than a 5% interest
in the direct or indirect ownership or control of LA to an RN Competitor,
without RN's prior written approval. LA may terminate this Agreement
immediately upon written notice to RN in the event of any attempted
transfer or assignment of this Agreement or any right or obligation
hereunder (except as provided in Section 14.3), or any sale, transfer,
relinquishment, voluntary or involuntary, by operation of law or otherwise,
of more than a 5% interest in the direct or indirect ownership or control
of an LA Competitor to RN without LA's prior written approval. As used
herein, an "RN Competitor" means any of the companies identified in Exhibit
C hereto. As used herein, an "LA Competitor" means any
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of the companies identified in Exhibit D hereto. Any termination right
under this Section 8.3 must be exercised within ten (10) business days
after the applicable trigger event or shall be deemed forever waived For
the avoidance of doubt, a termination pursuant to this Section 8.3 shall
not constitute an event that triggers release of the source code escrow
pursuant to Section 3.3 above. An initial public offering of the common
stock of either LA or RN shall not constitute an event that shall trigger
either party's termination right hereunder.
8.4 Effect of Termination. Upon the effective date of termination of this
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Agreement, the non-perpetual licenses granted hereunder shall terminate
immediately. LA will either immediately return all Licensed Software to RN
or certify in writing to RN that all copies of all Licensed Software have
been destroyed, except that LA may retain one copy of the Licensed Software
for archival purposes and to furnish support services to end-user clients.
Perpetual licenses shall survive unless this Agreement is terminated for
default by the licensing party pursuant to Section 8.2. Notwithstanding
anything to the contrary herein, any licenses to use the Licensed Software
or the LA Products properly granted during the Term to the parties' end
users shall survive any termination of this Agreement.
9. CONFIDENTIALITY
"Confidential Information" means any trade secret information or
information otherwise designated by a party as being confidential relating
to either party's products, product plans, designs, computer code,
technical information, costs, pricing, financing, marketing plans, business
opportunities, personnel, research and development or know-how. All
Confidential Information that is disclosed orally shall be documented in
writing by the disclosing party and delivered to the receiving party within
twenty (20) business days after disclosure. Confidential Information shall
not include information that (i) is or becomes generally known or available
through no fault of the receiving party, (ii) was known by or disclosed to
the receiving party prior to disclosure, (iii) is independently developed
by the receiving party, or (iv) is made generally available by the
disclosing party without any restriction. The parties shall use reasonable
efforts and at least the same care that each uses to protect its own
Confidential Information of like importance, to prevent unauthorized
dissemination or disclosure of the other party's confidential information
during and for three (3) years following the last day of the Term. Neither
party will use the other's Confidential Information for purposes other than
those necessary to directly further the purposes of this Agreement. Neither
party will disclose to third parties the other's Confidential Information
without the prior written consent of the other party, provided, however,
that nothing will preclude a party from making disclosure to a third party
for the purpose of due diligence in a financing transaction, merger,
acquisition, business combination or other similar transaction, or from
making any disclosures to any governmental agency having jurisdiction over
the disclosing party, or unless otherwise required by law, government order
or court proceeding. Each party shall return the Confidential Information
to the other party upon termination of the Agreement or upon the request of
the other party. Except as expressly provided in this Agreement, no
ownership or license right is granted in any Confidential Information.
10. PROPRIETARY RIGHTS
10.1 LA. LA shall retain all right, title and interest in and to the LA
--
Products, including without limitation any copyright, patent, trade secret,
or other intellectual property rights therein, subject to RN's underlying
ownership in any Licensed Software included, therein, all LA trademarks,
and all LA Confidential Information, and any copies thereof, regardless of
the media or form on or in which the LA Products or copies may exist. RN
acknowledges and agrees that the LA Products are proprietary to LA, and are
protected by the copyright laws of the United States and international
copyright treaties. Unauthorized copying of the LA Products, including
modification, merger or inclusion with any other software, is expressly
forbidden. RN shall not be deemed, by anything contained in or done
pursuant to this Agreement, to acquire any right, title or interest in any
trademark, copyright, patent or other intellectual property of LA, and
shall do nothing to prejudice the value or validity of LA's rights therein
or ownership thereof.
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10.2 RN. RN shall retain all right, title and interest in and to the Licensed
--
Software, including without limitation any copyright, patent, trade secret,
or other intellectual property rights therein, all RN trademarks and all RN
Confidential Information, and any copies thereof, regardless of the media
or form on or in which the Licensed Software or copies may exist. LA
acknowledges and agrees that the Licensed Software is proprietary to RN,
and is protected by the copyright laws of the United States and
international copyright treaties. Unauthorized copying of the Licensed
Software, including modification, merger or inclusion with any other
software, is expressly forbidden. LA shall not be deemed, by anything
contained in or done pursuant to this Agreement, to acquire any right,
title or interest in any trademark, copyright, patent or other intellectual
property of RN, and shall do nothing to prejudice the value or validity of
RN's rights therein or ownership thereof.
10.3 In the event that, during or after the Term, LA is granted a patent on an
invention that was derived from LA's access to RN's SDK or Confidential
Information during development pursuant to Section 2.1 hereunder, LA shall
grant to RN, and hereby grants to RN, a nonexclusive, non-transferable,
perpetual, royalty-free license to exercise the patent rights under the
applicable patent. During and after the Term, RN shall grant to LA, and
hereby grants to LA, a nonexclusive, perpetual, irrevocable, royalty-free,
license to exercise the patent rights under any patents that are granted to
RN that are improvements on the patent(s), if any, licensed by LA under
this Section 10.3. In the event that during the Term either party files a
lawsuit against the other party alleging patent infringement by the other
party, the other party shall have the right to terminate this Agreement
immediately upon written notice to the party that filed the lawsuit. The
parties agree that in any dispute arising out of this Section 10.3, RN will
bear the burden of proof by a preponderance of the evidence.
11. LIMITED WARRANTY
11.1 RN's Limited Warranty.
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(a) RN warrants, solely for the benefit of LA, that for a period of ninety (90)
days from the date of delivery to LA: (i) the Licensed Software, if
operated as directed, will substantially achieve the functionality
described in the User Documentation, and (ii) that the media containing the
Licensed Software, if provided by RN, is free in material respects from
defects in material and workmanship; provided, however, that the foregoing
warranty is expressly contingent (and shall be otherwise void) upon: (1)
the use of the Licensed Software strictly in accordance with the
instructions and User Documentation therefor; (2) the absence of misuse or
damage thereto; (3) the absence of any alteration or modification thereto;
and (4) LA's acceptance of Licensed Software for distribution with
knowledge that the media upon which the Licensed Software are reproduced
may contain certain defects. RN makes no representation or warranty that
the information or functions contained in the Licensed Software will meet
LA's requirements or that the use or operation of the Licensed Software
will be uninterrupted, error free or secure, or that any Licensed Software
defects are correctable or will be corrected. THE FOREGOING WARRANTY SHALL
NOT APPLY TO THE SAMPLE SOURCE CODE, WHICH IS PROVIDED TO LA AS IS, WITHOUT
WARRANTY OF ANY KIND.
(b) RN's entire liability and LA's exclusive remedy for any breach of the
limited warranty set forth in this Section 11.1 shall be, in RN's sole
------------
discretion: (i) to replace RN's defective media; or (ii) to advise LA how
to achieve substantially the same functionality with the Licensed Software
as described in the User Documentation through a procedure different from
that set forth in the User Documentation. Repaired, corrected or replaced
Licensed Software and User Documentation shall be covered by this limited
warranty for the period remaining under the warranty that covered the
original Software, or if longer, for thirty (30) days after the date RN
either shipped to LA the repaired or replaced Licensed Software or RN
advised LA as to how to operate the Licensed Software so as to achieve the
functionality described in the Documentation, whichever is applicable.
(c) NO OTHER WARRANTIES. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW RN
DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT
NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR
9
PURPOSE, WHICH ARE EXPRESSLY DISCLAIMED, WITH REGARD TO THE LICENSED
SOFTWARE AND THE USER DOCUMENTATION.
11.2 LA's Limited Warranty.
---------------------
LA warrants, solely for the benefit of RN, that for a period of ninety (90)
days from the date of delivery to RN (i) the LA Client Software, if
operated as directed, will substantially achieve the functionality
described in the documentation for the LA Client Software, and (ii) that
the media containing the LA Client Software, if provided by LA, is free in
material respects from defects in material and workmanship; provided,
however, that the foregoing warranty is expressly contingent (and shall be
otherwise void) upon: (1) the use of the LA Client Software strictly in
accordance with the instructions and user documentation therefor; (2) the
absence of misuse or damage thereto; (3) the absence of any alteration or
modification thereto; and (4) RN's acceptance of LA Client Software for
distribution with knowledge that the media upon which the LA Client
Software are reproduced may contain certain defects. LA makes no
representation or warranty that the information or functions contained in
the LA Client Software will meet RN's requirements or that the use or
operation of the LA Client Software will be uninterrupted, error free or
secure, or that any LA Product defects are correctable or will be
corrected.
(a) LA's entire liability and RN's exclusive remedy for any breach of the
limited warranty set forth in this Section 11.2 shall be, in LA's sole
------------
discretion: (i) to replace LA's defective media; or (ii) to advise RN
how to achieve substantially the same functionality with the LA Client
Software as are described in the user documentation through a
procedure different from that set forth in the user documentation.
Repaired, corrected or replaced LA Client Software and user
documentation shall be covered by this limited warranty for the period
remaining under the warranty that covered the original LA Client
Software, or if longer, for thirty (30) days after the date LA either
shipped to RN the repaired or replaced LA Product or LA advised RN as
to how to operate the LA Product so as to achieve the functionality
described in the documentation, whichever is applicable.
(b) NO OTHER WARRANTIES. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW
-------------------
LA DISCLAIMS ALL OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED,
INCLUDING, BUT NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, WHICH ARE EXPRESSLY DISCLAIMED,
WITH REGARD TO THE LA PRODUCTS AND THE USER DOCUMENTATION.
12. INDEMNIFICATION
12.1 RN's Indemnification. RN shall defend LA and its directors, officers,
--------------------
agents, employees and representatives, in any third party action for
infringement by, or alleged infringement by the Licensed Software of any
trademark, service xxxx, patent, copyright, or misappropriation of any
trade secret by the Licensed Software, and will pay any final judgments
awarded or settlements entered into in any such action. LA agrees that it
shall notify RN of all threats, claims and proceedings related to any such
suit promptly after such threat, claim or proceeding comes to the attention
of LA. RN shall have sole control of the defense and/or settlement of any
such suit, and LA shall furnish to RN, upon request, information available
to LA for such defense, and shall provide RN with such assistance in
defending such suits as is requested by RN, at RN's expense. If LA's use of
the Licensed Software under the terms of this Agreement is, or in RN's
opinion is likely to be, enjoined due to the type of infringement or
misappropriation specified above, then RN may, at its sole option and
expense, either (i) procure for LA the right to continue using the Licensed
Software under the terms of this Agreement; or (ii) replace or modify the
affected Licensed Software so that it is noninfringing and substantially
equivalent in function to the enjoined Licensed Software. The foregoing
obligation of RN does not apply (i) with respect to versions of the
Licensed Software or portions or components thereof: (a) which are modified
after shipment, if the alleged infringement relates to such modification,
and if such modification was not authorized, expressly permitted or
performed by RN; (b) which are combined with other products, processes or
materials, if the alleged infringement relates to such combination and if
RN did not authorize or expressly permit the combination; or (c) where LA's
use of the Licensed Software is not in accordance with the license granted
under this Agreement; or (ii) for use or distribution of Licensed Software
or otherwise not in accordance with the terms and conditions of this
Agreement.
10
12.2 LA Indemnification. LA shall defend RN and its directors, officers,
------------------
agents, employees and representatives, in any third party action for
infringement by, or alleged infringement by the LA Products of any
trademark, service xxxx, patent, copyright, or misappropriation of any
trade secret by the LA Products, and will pay any final judgments awarded
or settlements entered into in any such action. RN agrees that it shall
notify LA of all threats, claims and proceedings related to any such suit
promptly after such threat, claim or proceeding comes to the attention of
RN LA shall have sole control of the defense and/or settlement of any such
suit, and RN shall furnish to LA, upon request, information available to RN
for such defense, and shall provide LA with such assistance in defending
such suits as is requested by LA, at LA's expense. If RN's use of the LA
Products under the terms of this Agreement is, or in LA's opinion is likely
to be, enjoined due to the type of infringement or misappropriation
specified above, then LA may, at its sole option and expense, either (i)
procure for RN the right to continue using the LA Products under the terms
of this Agreement; or (ii) replace or modify the affected LA Products so
that it is noninfringing and substantially equivalent in function to the
enjoined LA Products. The foregoing obligation of LA does not apply (i)
with respect to versions of the LA Products or portions or components
thereof: (a) that are modified after shipment, if the alleged infringement
relates to such modification, and if such modification was not authorized,
expressly permitted or performed by LA; (b) that are combined with other
products, processes or materials, if the alleged infringement relates to
such combination and if LA did not authorize or expressly permit the
combination; or (c) where RN's use of the LA Products is not in accordance
with the license granted under this Agreement; or (ii) for use or
distribution of LA Products or otherwise not in accordance with the terms
and conditions of this Agreement.
13. LIMITATION OF LIABILITY
IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL,
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGE OR LOSS OF ANY NATURE (E.G.,
DAMAGE TO PROPERTY, LOSS OF PROFITS, BUSINESS INTERRUPTION, LOST SAVINGS,
LOSS OF USE, LOST OR DAMAGED FILES OR DATA, INJURY TO PERSON, OR ANY CLAIMS
OF THOSE NOT A PARTY TO THE AGREEMENT) WHICH MAY ARISE IN CONNECTION WITH
THE USE, ADAPTATION, MERGER, INCORPORATION, DISTRIBUTION, INSTALLATION,
REMOVAL OR SUPPORT OF THE LICENSED SOFTWARE AND/OR THE LA PRODUCTS PURSUANT
TO THIS AGREEMENT, REGARDLESS OF WHETHER SUCH CLAIMS ARE BASED IN WARRANTY,
CONTRACT, NEGLIGENCE, TORT, PRODUCTS LIABILITY OR OTHERWISE, EVEN IF THE
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE OR LOSS.
14. GENERAL.
14.1 Notice. Any notice or other communication permitted or required under this
------
Agreement shall be given in writing and shall be deemed effective upon the
business day after delivery (including courier service), overnight mail
delivery, upon confirmed facsimile transmission, or five (5) days after
deposit, postage prepaid, in the first class mail of the United States
properly addressed to the appropriate party at the address set forth below:
RN: RealNetworks, Inc.
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Point of contact: Xxx Xxxxxx, Senior VP, Media Systems
Facsimile No.: 000-000-0000
With a copy to: General Counsel
Facsimile No.: 000-000-0000
LA: Liquid Audio, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxx 00000
Xxxxxx Xxxxx, VP of Business Development Facsimile No. (000) 000-0000
11
with a copy to: Wilson, Sonsini, Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Point of Contact: Xxxx Xxxxx
Facsimile No. (000) 000-0000
Either party may from time to time change such address by giving the other
party notice of such change in accordance with this section.
14.2 Independent Contractors. RN and LA are independent contractors in all
-----------------------
relationships and actions under and contemplated by the Agreement.
Notwithstanding anything in this Agreement to the contrary, the parties do
not by this Agreement intend to form, nor shall this Agreement be construed
to constitute, a LAship, joint venture, employment, or agency relationship
between them, or to authorize LA to enter into any commitment or agreement
binding on RN or to allow one party to accept service of any legal process
addressed to, or intended for, the other party. LA shall not make any
warranties, guarantees or any other commitments on behalf of RN pursuant to
the Agreement.
14.3 No Assignment. Neither party shall assign, transfer or otherwise dispose of
-------------
this Agreement or any rights or obligations hereunder without the other
party's written consent. This Agreement shall be binding upon and inure to
the benefit of the parties, their successors and permitted assigns.
14.4 Press Releases. Neither party shall issue any press releases relating to
--------------
this Agreement without the approval of the other.
14.5 Survival. The following provisions shall survive the expiration or
--------
termination of this Agreement: 1, 2.2, 7.3, 7.4, 8.4, 9-14, (except for
14.4), and any other terms herein that expressly state that they apply
after the Term.
14.6 Disputes. Any dispute arising out of or relating to this Agreement that is
--------
not resolved by the parties shall be submitted to non-binding mediation to
be held in accordance with the Commercial Mediation Rules of the American
Arbitration Association ("AAA"). The parties agree that their participation
in a mediation and the entire mediation proceeding, including but not
limited to all statements, discussions, conducts, rulings, findings or
determinations in that mediation proceeding will be confidential, will
constitute settlement negotiations under Rule 408 of the Federal Rules of
Evidence. The parties agree to perform whatever steps are necessary to
ensure that each mediation proceeding complies with this paragraph. If not
thus resolved, it shall be referred to a sole arbitrator knowledgeable in
the Internet and software industries in the United States, selected by the
parties within thirty days of mediation or, in the absence of such
selection, to AAA arbitration which shall be governed by the United States
Arbitration Act. The award shall be made within such months of selection of
the arbitrator and may be entered in any court having jurisdiction. The
mediation and arbitration shall be held in Seattle, Washington. The
arbitrator shall determine issues of arbitrability but may not limit,
expand, or otherwise modify the terms of the Agreement nor have authority
to award punitive or other damages in excess of compensatory damages, and
each party irrevocably waives any claim thereto. Each party shall bear its
own expenses but those related to the compensation of the mediator and the
arbitrator shall be divided equally. The parties, their representatives,
other participants and the mediator and arbitrator shall hold the
existence, content and result of mediation and arbitration in confidence.
Notwithstanding anything in this Section 14.6 to the contrary: (i)
------------
disputes relating to intellectual property rights shall not be subject to
mediation or arbitration; and (ii) either party may seek injunctive relief
for breaches of confidentiality or intellectual property rights or to
maintain the status quo pending mediation and arbitration in accordance
with this section.
14.7 U.S. Government Restricted Rights and Export Restriction. The Licensed
--------------------------------------------------------
Software and User Documentation are provided with RESTRICTED RIGHTS. Use,
duplication or disclosure by the Government is subject to restrictions set
forth in subparagraphs (a) through (d) of the Commercial Computer
Software--Restricted Rights at FAR 52.227-19 when applicable, or in
subparagraph (c)(1)(ii) of the Rights in Technical Data and
12
Computer Software clause at DFARS 252.227-7013, and in similar clauses in
the NASA FAR supplement, as applicable. Manufacturer is RealNetworks,
Xxx./0000 Xxxxx Xxxxxx, Xxxxx 000/ Xxxxxxx, Xxxxxxxxxx, 00000 LA
acknowledges that none of the Software or underlying information or
technology may be downloaded or otherwise exported or re-exported: (i)
into (or to a national or resident of) Cuba, Iran, Iraq, Libya, North
Korea, Syria, Sudan or Angola or any other country to which the U.S. has
embargoed goods; or (ii) to anyone on the U.S. Treasury Department's list
of Specially Designated Nationals or the U.S. Commerce Department's Table
of Denial Orders. The LA Products are likewise provided hereunder by LA on
the same basis as set forth above with respect to the Licensed Software
provided by RN.
14.8 Miscellaneous. This Agreement, and the Exhibits attached hereto and
-------------
incorporated herein, constitute the complete and exclusive agreement
between RN and LA with respect to the subject matter hereof, and
supersedes all oral or written understandings, communications or
agreements not specifically incorporated herein. If any provision in this
Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remaining provisions will continue in full force
without being impaired or invalidated in any way. No waiver, amendment or
modification of any provision of this Agreement shall be effective unless
it is in a document that expressly refers to this Agreement and is signed
by authorized representatives of both parties. Except as specifically
provided herein, failure or delay by either party in exercising any rights
or remedy under this Agreement shall not operate as a waiver of any such
right or remedy. Headings shall not be considered in interpreting this
Agreement. This Agreement shall be governed by the laws of the State of
Washington, without regard to its conflict of law rules. The United
Nations Convention of Contracts for the International Sale of Goods is
expressly excluded. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, both of which
together shall constitute one and the same instrument.
14.9 Force Majeure. Neither party shall be liable to the other for any delay or
-------------
failure to perform arising out of or related to any causes beyond such
party's reasonable control, including without limitation, acts of God,
wars, embargoes, strikes or labor disputes, failure of suppliers.
14.10 Freedom of Action. This agreement shall not be construed to imply any
-----------------
obligations other than as are expressly set forth herein. Each party may
have similar agreements with others. Subject to the terms of this
Agreement, each party may design, develop, manufacture, acquire or market
competitive products or services and conduct its business in whatever way
it chooses. IN WITNESS WHEREOF, the parties have entered into this
Agreement as of the Effective Date written above.
REAL NETWORKS, INC. LIQUID AUDIO, INC.
By: /s/ Xxx X. Xxxxx By: /s/ Xxxxxx Xxxxx
--------------------------- ------------------------------
Name: XXX X. XXXXXX Name: Xxxxxx Xxxxx
------------------------- ----------------------------
Title: SUP MS DIV Title: VP Business Development
------------------------ ---------------------------
Date: 5/28/98 Date: April 26, 1998
------------------------- ----------------------------
13
EXHIBIT A
LA PRODUCTS
-----------
"LA Product(s)" means the products and applications developed by LA hereunder
incorporating the Licensed Software which are compatible with RMA Server
Software, including:
(a) "LA Client Software," which means software that is incorporated in an RMA
Player and utilizes the RMA application programming interfaces ("APIs") and
will not interoperate with any server software, other than an RMA server,
that streams files by any RMA supported protocol;
(b) "LA Tools," which means software tools that may import datatypes and export
datatypes using the RealMedia Libraries; and
(c) "LA Server Applications," which means LA software applications that
interface with RMA Server Software and add datatypes that can be streamed
from RMA Server Software.
14
Exhibit B
RMA SERVER SOFTWARE CAPABILITIES
--------------------------------
The RMA Server Software includes the following:
1) installer for the appropriate operating system platform
2) operators manual
3) exposed interfaces to plug-in a monitor, administrator, file system,
datatype or broadcast datatype
4) base-level monitoring tool
5) ability to stream a datatype given a file format plug-in or broadcast plug-
in and license key
6) supports the following platforms Windows NT; Solaris
15
Exhibit C
RN Competitors
--------------
1. Microsoft
2. Netscape
3. Cisco Systems
4. Apple Computer
5. Oracle
6. Sun Microsystems
7. JavaSoft
8. Xing
9. Starlight
10. Emblaze
11. Macromedia
16
Exhibit D
LA Competitors
--------------
1. a2b music
2. Cerberus
3. Audiosoft
4. Intertrust
17
EXHIBIT 10.8
AMENDMENT TO AGREEMENT EFFECTIVE AS OF APRIL 26, 1998 BY AND
BETWEEN REAL NETWORKS, INC. AND LIQUID AUDIO, INC.
This amendment (the "Amendment") dated as of May 4, 1999 to the "LA
Agreement between RealNetworks and Liquid Audio", effective April 26, by and
between Real Networks, Inc. with its principal place of business at 0000 Xxxxx
Xxxxxx Xxxxx 0000, Xxxxxxx XX 00000 ("RN") and Liquid Audio, Inc. ("LA") with
its principal place of business at 000 Xxxxxxx Xxxxxx, Xxxxxxx Xxxx, XX 00000
(the "Agreement").
WHEREAS, the RN and LA desire to amend the terms of the Agreement as set
forth below;
NOW THEREFORE, in consideration of the mutual promises set forth herein, RN
and LA hereby agree as follows:
1. GENERAL
A. Except as otherwise specified herein, all capitalized terms shall have the
same meanings as set forth in the Agreement. This Amendment is supplementary
to and modifies the Agreement. To the extent there is any inconsistency or
discrepancy between the Agreement and this Amendment with respect to the
specific subject matter contained herein, the terms and conditions set forth
in this Amendment shall control and supersede. Nothing contained herein
shall be interpreted as invalidating the Agreement and the provisions of the
Agreement will continue to govern the relationship between RN and LA insofar
as they do not conflict with this Amendment.
2. TERM AND TERMINATION
A. Section 8.1 of the Agreement (Term) is hereby amended to reflect an
extension of the Term for the licensing and distribution relationship
described in the Agreement, as follows:
1. by changing the first sentence so that it now reads as follows: "This
Agreement shall commence as of the Effective Date, and terminate two (2)
years from the Effective Date (the "Term"), unless earlier terminated as
provided herein."
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.
Real Networks, Inc. Liquid Audio, Inc.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxx Xxxxx
--------------------------- -----------------------------
Name: XXXX X. XXXXX Name: XXXXXX XXXXX
-------------------------- ---------------------------
Title: VP Title: VP Business Development
------------------------- --------------------------
[SEAL APPEARS HERE]
