<PAGE>
As filed with the Securities and Exchange Commission on July 8, 1999
Registration No. 333-77707
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
Under The Securities Act of 1933
---------------
LIQUID AUDIO, INC.
(Exact name of Registrant as specified in its charter)
---------------
<TABLE>
<CAPTION>
Delaware 7373 77-0421089
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
810 Winslow Street
Redwood City, CA 94063
(650) 549-2000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------
GERALD W. KEARBY
Chief Executive Officer
LIQUID AUDIO, INC.
810 Winslow Street
Redwood City, CA 94063
(650) 549-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Please send copies of all communications to:
HANK V. BARRY, ESQ. LAIRD H. SIMONS, III, ESQ.
ISSAC J. VAUGHN, ESQ. ROBERT A. FREEDMAN, ESQ.
KELLY AMES MOREHEAD, ESQ. SCOTT J. LEICHTNER, ESQ.
Wilson Sonsini Goodrich & Rosati, Fenwick & West LLP
P.C. Two Palo Alto Square
650 Page Mill Road Palo Alto, CA 94306
Palo Alto, CA 94304 (650) 494-0600
(650) 493-9300
---------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
---------------
If the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), please check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
Explanatory Note
This Amendment is for the sole purpose of re-filing exhibits 10.37 and 10.43.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than the
underwriting discount, payable by the Registrant in connection with the sale of
the securities being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and the Nasdaq National Market listing
fee.
<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 16,680
NASD Filing Fee.................................................... 6,500
Nasdaq National Market Listing Fee................................. 94,000
Printing Costs..................................................... 150,000
Legal Fees and Expenses............................................ 300,000
Accounting Fees and Expenses....................................... 150,000
Blue Sky Fees and Expenses......................................... 10,000
Transfer Agent and Registrar Fees.................................. 10,000
Miscellaneous...................................................... 212,820
--------
Total............................................................ $950,000
========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Article VII of the Restated
Certificate of Incorporation to be filed upon the completion of this offering
(Exhibit 3.2 hereto) and Article VI of our Bylaws to be adopted upon the
completion of this offering (Exhibit 3.4 hereto) provide for indemnification of
our directors, officers, employees and other agents to the maximum extent
permitted by Delaware law. In addition, we have entered into Indemnification
Agreements (Exhibit 10.1 hereto) with our officers and directors that will
become effective upon the closing of this offering. The Underwriting Agreement
(Exhibit 1.1) also provides for cross-indemnification among Liquid Audio and
the Underwriters with respect to certain matters, including matters arising
under the Securities Act.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since our incorporation in January 1996, we have sold and issued the
following securities:
1. On April 15, 1996 we issued 3,431,244 shares of common stock to seven
founders for an aggregate consideration of $4,574.99.
2. On May 31, 1996 we issued 2,286,591 shares of Series A mandatorily
redeemable convertible preferred stock (Series A) to seven investors for an
aggregate consideration of $1,500,004.68. On June 28, 1996 we issued
609,753 shares of Series A to one investor for an aggregate consideration
of $399,998.46. On July 30, 1996 we issued 153,645 shares (as adjusted for
stock splits) of Series A to the same investor to which we issued shares of
Series A on June 28, 1996, for an aggregate consideration of $100,791.12.
3. On May 5, 1997 we issued a warrant for 15,306 shares of Series B
mandatorily redeemable convertible preferred stock (Series B) to a bank in
connection with a short-term loan agreement. Such warrant has an exercise
price of $1.96 per share.
4. On May 23, 1997 we issued 2,421,581 shares of Series B to seven
investors for an aggregate consideration of $4,746,294.84. On May 28, 1997
we issued 765,307 shares of Series B to five investors, two of which we
issued shares of Series B to on May 23, 1997, for an aggregate
consideration of $1,499,999.76.
II-1
<PAGE>
5. On January 1, 1998 we issued a warrant for 48,860 shares of common
stock to one strategic partner. Such warrant has an exercise price of
$6.14 per share.
6. On January 1, 1998 we issued 38,316 shares of common stock to one
strategic partner for an aggregate consideration of $2,554.40.
7. On July 31, 1998 we issued 3,179,962 shares of Series C mandatorily
redeemable convertible preferred stock (Series C) to ten investors for an
aggregate consideration of $19,524,966.68. On September 25, 1998 we issued
325,732 shares of Series C to three investors for an aggregate
consideration of $1,999,994.48. On September 29, 1998 we issued 1,628
shares of Series C to one investor for an aggregate consideration of
$9,995.92.
8. On July 31, 1998 we issued a warrant for 4,544 shares of Series C to a
bank in connection with a short term loan agreement. Such warrant has an
exercise price of $6.14 per share.
9. On April 23, 1999 we issued 4,071 shares of common stock to one
employee for an aggregate consideration of $30,532.50.
10. From March 28 through April 30, 1999 we issued warrants exercisable
for a total of 12,000 shares of common stock to five strategic partners.
Such warrants have an exercise price of $6.56 per share.
11. On June 9, 1999 we issued warrants exercisable for a total of 381,203
shares of common stock to Amazon.com, Inc. Such warrants have an exercise
price of $6.56 per share.
12. On June 16, 1999 we issued 100,000 shares of common stock to Virgin
Holdings, Inc., an affiliate of EMI Recorded Music, in consideration for an
encoding license.
13. Since our incorporation, we have issued options to purchase an
aggregate of 2,175,708 shares of common stock with exercise prices ranging
from $0.0667 to $8.00 per share. Since our incorporation through June 15,
1999, we have issued 737,807 shares of common stock pursuant to stock
option exercises for an aggregate consideration of $74,197.63.
There were no underwriters employed in connection with any of the
transactions set forth in Item 15.
The issuances of securities described in Items 15(1) through 15(12) were
deemed to be exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act as transactions by an issuer not involving a
public offering. The issuances of securities described in Item 15(13) were
deemed to be exempt from registration under the Securities Act in reliance on
Section 4(2) or Rule 701 promulgated thereunder as transactions pursuant to
compensatory benefit plans and contracts relating to compensation.
The recipients of securities in each such transaction represented their
intention to acquire the securities for investment only and not with a view to
or for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and other instruments issued in such
transactions. All recipients either received adequate information about the
Registrant or had access, through employment or other relationships, to such
information.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement
3.1* Certificate of Incorporation as currently in effect
3.2* Form of Restated Certificate of Incorporation (to be filed with the
Delaware Secretary of State prior to the closing of the offering covered
by this Registration Statement)
3.3* Bylaws as currently in effect
3.4* Form of Bylaws (to be adopted upon the completion of the offering covered
by this Registration Statement)
4.1* Form of Specimen Stock Certificate
4.2* Second Amended and Restated Investor Rights Agreement dated July 31, 1998
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
regarding legality of the securities being issued
10.1* Form of Indemnification Agreement, entered into between the Registrant
and each of its directors and officers, to become effective upon the
closing of the offering made under this Registration Statement
10.2* 1996 Equity Incentive Plan
10.3* 1999 Employee Stock Purchase Plan
10.4* Licensing Agreement with SESAC dated May 21, 1998
10.5+* Software Cross License Agreement with Adaptec, Inc. dated June 12,
1998
10.6* Form of Liquid Music Network Agreement
10.7+* Letter Agreement with Compaq Computer Corporation dated March 23, 1998
10.8+* LA Agreement with Real Networks, Inc. dated April 26, 1998
10.9+* Binary Software License Agreement with Precept Software, Inc. dated
September 30, 1997
10.10+* Patent License Agreement with Fraunhofer-Gesellschaft, zur Forderung
der angewandten Forschung e.V. dated August 14, 1998
10.11+* Software License Agreement with Fraunhofer-Gesellschaft, zur Forderung
der angewandten Forschung e.V. dated August 14, 1998
10.12+* OEM Master License Agreement with RSA Data Security, Inc. dated July
18, 1997
10.13+* Agreement in Principle with N2K, Inc. dated February 12, 1997
10.14+* Patent License Agreement with Dolby Laboratories Licensing
Corporation, dated May 3, 1996
10.15+* Adjustment to Patent and License Agreement with Dolby Laboratories
Licensing Corporation, dated September 18, 1997
10.16+* Source Code, Trademark and Know-How License Agreement with Dolby
Laboratories Licensing Corporation dated May 3, 1996
10.17* Founders Restricted Stock Purchase Agreement (with amendments) with
Gerald W. Kearby dated April 25, 1996
10.18* Founders Restricted Stock Purchase Agreement (with amendments) with
Philip R. Wiser dated April 25, 1996
10.19* Founders Restricted Stock Purchase Agreement (with amendments) with
Robert G. Flynn dated April 25, 1996
10.20* Master Equipment Lease No. 0044 (with amendments) with Phoenix Leasing
Incorporated dated as of October 15, 1996
10.21* Summary Plan Description of 401(k) Plan
10.22* Loan and Security Agreement with Silicon Valley Bank dated April 16,
1998
10.23* Loan and Security Agreement with Silicon Valley Bank dated November
16, 1998
10.24* Lease Agreement with Master Lease, a Division of Tokai Financial
Services, Inc., dated March 3, 1998
10.25* Lease Agreement with John Anagnostou Realty and Michael J. Monte,
dated February 16, 1999, for property located at 2221 Broadway,
Redwood City, California
10.26* Lease and Service Agreement with Alliance Business Centers, dated
August 17, 1998, and Office Rider dated February 1, 1999, for
property located at 599 Lexington Avenue, New York, New York
10.27* Lease Agreement with New Retail Concepts Ltd., dated September 1,
1998, for property located at 21 Bridge Square, Westport, Connecticut
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.28* Commercial Lease with Jim and Jeannette Beeger, dated November 3,
1998, for property located at 820 Winslow Street, Redwood City,
California
10.29* Commercial Lease with John Anagnostou Realty, dated October 9, 1997,
for property located at 810 Winslow Street, Redwood City, California
10.30+* Software Reseller Agreement with Liquid Audio Japan, dated as of
August 9, 1998
10.31+* Shareholder Agreement with Super Stage, Inc., Liquid Audio Japan,
Inc., ITOCHU Corporation, and Hikari Tsushin, Inc., dated March 31,
1999
10.32* Loan Agreement with Super Factory, Inc., dated March 31, 1999
10.33+* Share Sale and Purchase and Option Agreement with Super Stage, Inc.,
dated March 31, 1999
10.34+* Shareholders Agreement with SKM Limited and Liquid Audio Korea Co.
Ltd. dated December 31, 1998
10.35+* Software Reseller and Services Agreement with Liquid Audio Korea Co.
Ltd. dated December 31, 1998
10.36+* Consulting Agreement with Liquid Audio Korea Co. Ltd. dated December
31, 1998
10.37 Consulting Agreement with SKM Limited dated December 31, 1998
10.38* Guaranty issued to Liquid Audio, Inc. by SKM Limited dated December
31, 1998
10.39* Software License Agreement with Intel Corporation dated May 4, 1999
10.40* Liquid Remote Inventory Fulfillment System(TM) Merchant Affiliate and
License Agreement with MTS, Inc. dated May 14, 1999
10.41+* OEM Agreement with Sanyo Electric Co., Ltd. dated June 2, 1999
10.42* Amazon.com/Liquid Audio Advertising Agreement, including exhibits,
dated as of June 9, 1999
10.43 Online Program Agreement with Muze Inc., dated as of February 9, 1999
10.44* Letter Agreement By and Between Texas Instruments Incorporated, dated
as of January 29, 1999
10.45+* OEM Agreement with Toshiba Corporation, dated June 9, 1999
10.46* Agreement with Iomega Corporation, dated November 14, 1999
10.47* Stock Option Agreement with Gary J. Iwatani, dated November 10, 1997
10.48* Letter Agreement with Virgin Holdings, Inc., an affiliate of EMI
Recorded Music, dated June 16, 1999
23.1* Consent of PricewaterhouseCoopers LLP
23.2* Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(contained in Exhibit 5.1)
24.1* Power of Attorney (contained in the signature page to this
Registration Statement)
27.1* Financial Data Schedule
</TABLE>
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* previously filed
+ confidential treatment requested
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise,
II-4
<PAGE>
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer, or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto,
State of California on July 8, 1999.
/s/ Gerald W. Kearby*
By:__________________________________
Gerald W. Kearby
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO
THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gerald W. Kearby* President, Chief Executive July 8, 1999
____________________________________ Officer and Director
Gerald W. Kearby (Principal Executive
Officer)
/s/ Gary J. Iwatani Senior Vice President and July 8, 1999
____________________________________ Chief Financial Officer
Gary J. Iwatani (Principal Financial and
Accounting Officer)
/s/ Philip R. Wiser * Senior Vice President of July 8, 1999
____________________________________ Engineering, Chief
Philip R. Wiser Technical Officer and
Director
/s/ Ann Winbald * Director July 8, 1999
____________________________________
Ann Winblad
/s/ Silvia Kessel * Director July 8, 1999
____________________________________
Silvia Kessel
/s/ Sanford R. Climan * Director July 8, 1999
____________________________________
Sanford R. Climan
/s/ Eric Robison * Director July 8, 1999
____________________________________
Eric P. Robison
</TABLE>
/s/ Gary J. Iwatani
*By:___________________________
Gary J. Iwatani
Attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Title
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<C> <S>
1.1* Form of Underwriting Agreement
3.1* Certificate of Incorporation as currently in effect
3.2* Form of Restated Certificate of Incorporation (to be filed with the
Delaware Secretary of State prior to the closing of the offering
covered by this Registration Statement)
3.3* Bylaws as currently in effect
3.4* Form of Bylaws (to be adopted upon the completion of the offering
covered by this Registration Statement)
4.1* Form of Specimen Stock Certificate
4.2* Second Amended and Restated Investor Rights Agreement dated July 31,
1998
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation,
regarding legality of the securities being issued
10.1* Form of Indemnification Agreement, entered into between the Registrant
and each of its directors and officers, to become effective upon the
closing of the offering made under this Registration Statement
10.2* 1996 Equity Incentive Plan
10.3* 1999 Employee Stock Purchase Plan
10.4* Licensing Agreement with SESAC dated May 21, 1998
10.5+* Software Cross License Agreement with Adaptec, Inc. dated June 12,
1998
10.6* Form of Liquid Music Network Agreement
10.7+* Letter Agreement with Compaq Computer Corporation dated March 23, 1998
10.8+* LA Agreement with Real Networks, Inc. dated April 26, 1998
10.9+* Binary Software License Agreement with Precept Software, Inc. dated
September 30, 1997
10.10+* Patent License Agreement with Fraunhofer-Gesellschaft, zur Forderung
der angewandten Forschung e.V. dated August 14, 1998
10.11+* Software License Agreement with Fraunhofer-Gesellschaft, zur Forderung
der angewandten Forschung e.V. dated August 14, 1998
10.12+* OEM Master License Agreement with RSA Data Security, Inc. dated July
18, 1997
10.13+* Agreement in Principle with N2K, Inc. dated February 12, 1997
10.14+* Patent License Agreement with Dolby Laboratories Licensing
Corporation, dated May 3, 1996
10.15+* Adjustment to Patent and License Agreement with Dolby Laboratories
Licensing Corporation, dated September 18, 1997
10.16+* Source Code, Trademark and Know-How License Agreement with Dolby
Laboratories Licensing Corporation dated May 3, 1996
10.17* Founders Restricted Stock Purchase Agreement (with amendments) with
Gerald W. Kearby dated April 25, 1996
10.18* Founders Restricted Stock Purchase Agreement (with amendments) with
Philip R. Wiser dated April 25, 1996
10.19* Founders Restricted Stock Purchase Agreement (with amendments) with
Robert G. Flynn dated April 25, 1996
10.20* Master Equipment Lease No. 0044 (with amendments) with Phoenix Leasing
Incorporated dated as of October 15, 1996
10.21* Summary Plan Description of 401(k) Plan
10.22* Loan and Security Agreement with Silicon Valley Bank dated April 16,
1998
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Title
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<C> <S>
10.23* Loan and Security Agreement with Silicon Valley Bank dated November
16, 1998
10.24* Lease Agreement with Master Lease, a Division of Tokai Financial
Services, Inc., dated March 3, 1998
10.25* Lease Agreement with John Anagnostou Realty and Michael J. Monte,
dated February 16, 1999, for property located at 2221 Broadway,
Redwood City, California
10.26* Lease and Service Agreement with Alliance Business Centers, dated
August 17, 1998, and Office Rider dated February 1, 1999, for
property located at 599 Lexington Avenue, New York, New York
10.27* Lease Agreement with New Retail Concepts Ltd., dated September 1,
1998, for property located at 21 Bridge Square, Westport, Connecticut
10.28* Commercial Lease with Jim and Jeannette Beeger, dated November 3,
1998, for property located at 820 Winslow Street, Redwood City,
California
10.29* Commercial Lease with John Anagnostou Realty, dated October 9, 1997,
for property located at 810 Winslow Street, Redwood City, California
10.30+* Software Reseller Agreement with Liquid Audio Japan, dated as of
August 9, 1998
10.31+* Shareholder Agreement with Super Stage, Inc., Liquid Audio Japan,
Inc., ITOCHU Corporation, and Hikari Tsushin, Inc., dated March 31,
1999
10.32* Loan Agreement with Super Factory, Inc., dated March 31, 1999
10.33+* Share Sale and Purchase and Option Agreement with Super Stage, Inc.,
dated March 31, 1999
10.34+* Shareholders Agreement with SKM Limited and Liquid Audio Korea Co.
Ltd. dated December 31, 1998
10.35+* Software Reseller and Services Agreement with Liquid Audio Korea Co.
Ltd. dated December 31, 1998
10.36+* Consulting Agreement with Liquid Audio Korea Co. Ltd. dated December
31, 1998
10.37 Consulting Agreement with SKM Limited dated December 31, 1998
10.38* Guaranty issued to Liquid Audio, Inc. by SKM Limited dated December
31, 1998
10.39* Software License Agreement with Intel Corporation dated May 4, 1999
10.40* Liquid Remote Inventory Fulfillment System(TM) Merchant Affiliate and
License Agreement with MTS, Inc. dated May 14, 1999
10.41+* OEM Agreement with Sanyo Electric Co., Ltd. dated June 2, 1999
10.42* Amazon.com/Liquid Audio Advertising Agreement, including exhibits,
dated as of June 9, 1999
10.43 Online Program Agreement with Muze Inc., dated as of February 9, 1999
10.44* Letter Agreement By and Between Texas Instruments Incorporated, dated
as of January 29, 1999
10.45+* OEM Agreement with Toshiba Corporation, dated June 9, 1999
10.46* Agreement with Iomega Corporation, dated November 14, 1999
10.47* Stock Option Agreement with Gary J. Iwatani, dated November 10, 1997
10.48* Letter Agreement with Virgin Holdings, Inc., an affiliate of EMI
Recorded Music, dated June 16, 1999
23.1* Consent of PricewaterhouseCoopers LLP
23.2* Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(contained in Exhibit 5.1)
24.1* Power of Attorney (contained in the signature page to this
Registration Statement)
27.1* Financial Data Schedule
</TABLE>
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* previously filed
+ confidential treatment requested
<PAGE>
EXHIBIT 10.37
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made an entered into as of
the 31 day of December, 1998 (the "Effective Date"), by and between Liquid
Audio, Inc., a corporation duly incorporated and existing under the laws of the
State of California, U.S.A. with its principal place of business at 2403
Broadway, Redwood City, California 94063 U.S.A. ("Liquid Audio") and SKM
Limited, a corporation duly incorporated and existing under the laws of the
Republic of Korea with its principal place of business at HaeSung 1 Building,
5F, 942 Daechi 3-Dong, Kangnam-Gu, Seoul, 135-283 Korea ("SKM").
WITNESSETH
----------
WHEREAS, Liquid Audio and SKM desire to establish a relationship in order
to form a joint venture company, a.k.a. Liquid Audio Korea ("LAK"), in the
Republic of Korea.
WHEREAS, as one of the efforts made by SKM to form and promote the joint
venture, SKM desires to obtain the benefit of consulting and advisory services
of Liquid Audio, with focus on the technical and business aspects; and
WHEREAS, Liquid Audio is willing to render such consulting and advisory
services to SKM.
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements set forth below, it is agreed as follows:
Article 1. Appointment
-----------
Subject to the terms and conditions hereinafter set forth, SKM hereby
appoints Liquid Audio as its consultant to provide consulting and advisory
services as described in Article 2 hereunder during the term of this Agreement
as set forth in Article 4 hereof, and Liquid Audio hereby accepts such
appointment.
Article 2. Scope of Services
-----------------
The consulting and advisory services, further details of which are
described in Exhibits 1 nd 2 attached hereto, to be provided by Liquid Audio for
SKM shall mainly include, but shall not be limited to, the following:
1. Providing technical consulting and support, one of the projects being
the creation of a consumer electronic product (including flash memory
music players);
2. Providing business consulting and support;
(collectively, the "Services")
In respect of the Services, SKM acknowledges that the Services have been
provided since 1 October 1998 and that such Services shall continue until 31
December 1998.
<PAGE>
SKM acknowledges that all Services are provided on an as-is basis without
warranty of any kind, and Liquid Audio disclaims any and all warranties, whether
express or implied. Liquid Audio reserves all ownership rights in and to the
work product and pre-existing materials delivered or disclosed to SKM pursuant
to the Services (herein, "LA Materials"). SKM shall have a limited license to
use the LA Materials internally for the purpose of furthering the contemplated
joint venture between the parties in a manner subject to the mutual approval of
both parties, and for no other purpose. During and after the term of this
Agreement, all LA Materials are and remain the confidential information of
Liquid Audio and SKM agrees to maintain the confidentiality of such materials
and not to disclose such materials to any other party.
Article 3. Consulting Fee
--------------
In consideration of the Services rendered by Liquid Audio under Article 2,
SKM shall provide to Liquid Audio the consulting fee of Eight Hundred and
Fifty Thousand United States Dollars (US$850,000.00) net of any withholding tax.
The consulting fee shall be paid to Liquid Audio within ten days of the end of
the term. The payment shall be made by means of telegraphic transfer to the bank
account designated by Liquid Audio.
Article 4. Term
----
The term of this Agreement shall be from the Effective Date to 31 December
1998.
Article 5. Termination
-----------
Either party may terminate this Agreement by written notice to the other
party, should the other party breach any material term and condition of this
Agreement and fail to cure such material breach within five (5) days of
receiving the written notice of such breach specifying the particulars thereof.
Article 6. Notices
-------
Any notices required or permitted hereunder shall be given to the
appropriate party at the address specified below or at such other address as the
party may specify in writing. Such notice shall be deemed served upon personal
delivery, or if sent by certified or registered mail, portage prepaid, then
shall be deemed served ten (10) days after the date of mailing. Notice by
facsimile shall be deemed served upon receipt; provided that a confirmation copy
is also dispatched immediately thereafter by first-class registered mail.
Liquid Audio: Attn: Robert Flynn
Liquid Audio, Inc.
2403 Broadway, Redwood City
California, 94603 U.S.A.
Fax: (1-650) 549-2099
SKM: Attn: Kyu Hwa Lee
SKM Limited
<PAGE>
HaeSung 1 Building, 5F
942 Daechi 3-Dong, Kangnam-Gu
Seoul, 135-283
Fax: (82-2) 528-3013
Article 7. Miscellaneous
-------------
7.1 Conduct
- ------------
All Services to be performed by Liquid Audio shall be performed from Liquid
Audio's facilities in the State of California in the United States of America.
Liquid Audio shall at all time conduct its affairs under this Agreement in
accordance with a high standard of business ethics and propriety and in
accordance with the laws of the State of California and the United States of
America.
7.2 Independent Contractor
- ---------------------------
Nothing herein shall be construed to place Liquid Audio and SKM in
relationship of partners, joint ventures or principal and agent. The parties
hereto have negotiated and entered into this Agreement in good faith solely as
Independent contractors, and no employer-employee relationship exists, nor shall
be deemed to exist between them.
7.3 Expenses
- -------------
The parties shall bear their respective portions of costs and expenses
arising from, or in connection with, this Agreement.
7.4 Governing Law
- ------------------
This Agreement shall be governed by the laws of the Republic of Korea
without regard to its conflicts of laws provisions.
7.5 Enforceability
- -------------------
Should any provision of this Agreement be deemed unenforceable in any
judicial proceeding, such determination shall not affect the validity and
enforceability of the balance of the Agreement.
7.6 No Waiver
- --------------
Any waiver by either party of any provision of this Agreement, or of any
breach of this Agreement, shall be effective only if in writing signed by such
party, and such waiver shall not be deemed a continuing waiver of such provision
or a waiver of any subsequent breach of a similar or different nature.
7.7 Force Majeure
- ------------------
In the event of any failure or delay in the performance of this Agreement
due to war, civil commotion, fire, natural disaster, or any other similar cause
whatsoever beyond the reasonable control of a party whose performance is
affected thereby, the party so affected shall not be liable for such failure or
delay or the results thereof. Upon
<PAGE>
Exhibit 1
---------
Technical Consulting Services
-----------------------------
1. Technical Support for Player Reference Design
2. Techincal Support for the Development of Decoding Chip
3. Technical Rcommendation regarding all aspects of development for chipset
configuration and PCB layout, etc.
4. Technical support regarding system design for optimal performance of, (I)
Unauthorized copying prevention system for Liquid Audio's products, and (II)
Identification System.
5. Technical support in Liquid Audio's SP3 initiative.
<PAGE>
Exhibit 2
---------
Business Consulting Services
----------------------------
1. Support for Joint Research and development of business plan for Liquid Audio
Korea (the joint Venture company, a.k.a., LAK) and Liquid TMC Corporation.
Including, but not limited to, the following: (i) Research on music
industry. (ii) Research on tax and incentive benefits. (iii) Consumer market
behaviour. (iv) Detailed financial projections.
2. Support for education regarding Liquid Audio's global business operations.
3. Support for education regarding Liquid Audio's technology and business plan
in the United States.
4. Provision of information on worldwide trends: internet and global music
industry.
5. Support for establishment of relationship with representatives of the local
music industry.
6. Support for contacting and developing relationships with the intellectual
property (IP - related) governmental agencies in Korea.
7. Support for education regarding the intellectual property rights and royalty
reports.
8. Support for development of the management and organizational structures of
Liquid Audio Korea.
<PAGE>
EXHIBIT 10.43
ONLINE PROGRAM AGREEMENT
This Online Collaboration Agreement ("Agreement") is effective as of
February 9, 1999 ("Effective Date"), by and between Muze Inc., a New York
corporation with principal offices at 304 Hudson Street, New York, New York
10013 ("Muze"), and Liquid Audio, Inc., a California corporation with principal
offices at 810 Winslow Street, Redwood City, California 94063 ("Liquid").
WHEREAS, Liquid and Muze desire to collaborate in order to encode sound
clips and related content and to provide online services with such encoded sound
clips linked to Muze database information as set forth herein and on Exhibit A
attached hereto and hereby incorporated herein (the "Online Program");
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties agree as follows:
1. Online Program.
---------------
1.1 Cooperative Efforts. Each party shall use commercially reasonable
---------------------
efforts to develop, market, and otherwise further the Online Program. Each party
shall cooperate with and assist the other party in all aspects of the Online
Program. The Online Program shall commence on the Effective Date and shall
continue for the duration of the Term of this Agreement, unless the parties
mutually agree to terminate this Agreement.
1.2 Encoding and Technical Responsibilities. Liquid and Muze will jointly
---------------------------------------
undertake the encoding of music samples matched to the Muze database ("Linked
Sound Clips"), which will be encoded using the Liquid file format. The parties
contemplate that the Linked Sound Clips will generally be thirty (30) seconds
long, except with respect to jazz and classical music, for which the Linked
Sound Clips will generally be sixty (60) seconds long. Liquid will develop and
operate the server infrastructure to host and serve the Linked Sound Clips to
Online Merchants pursuant to the Online Program. The parties specific
responsibilities are set forth in Exhibit A.
1.3 Online Merchants Program. Liquid and Muze will jointly collaborate to
--------------------------
develop the Online Program. Each party will use reasonable commercial efforts to
promote and market the Online Program to online retailers, record labels and
other sound recording owners, portals, online service providers, and related
third parties (together, "Online Merchants"). Both parties will work to sign up
Online Program participants and execute appropriate customer agreements with
Online Merchants.
1.4 Customer Contacts. The parties will determine in advance which party,
------------------
if any, is to serve as the primary contact for servicing Online Program customer
relationships with the Online Merchants, and in each case the secondary contact,
if requested, shall refer all Online Program
1
<PAGE>
customer relationship issues to the primary contact and otherwise cooperate with
the primary contact in serving the customer relationship. If neither party has
been determined to be the primary contact, the parties will co-market and co-
administer the Online Program and will ensure that each party is fully informed
and included as reasonably appropriate in customer relationships that are
formed.
1.5 Online Program Revenue and Expenses. The development of the Online
-----------------------------------
Program shall include documentation of the parties' agreement with respect to
the treatment of revenue and expenses associated with the Online Program,
including the matters already agreed to and set forth in Exhibit A and the
process by which each of Liquid and Muze will recoup expenses against any
revenues generated from providing the Linked Sound Clips to the Online Merchants
pursuant to the Online Program. All further documentation of the parties'
agreement on these subjects shall be mutually agreed to in writing, signed and
attached to this Agreement as a part of Exhibit A. Any agreement to share
expenses or revenues from any source other than as expressly set forth in
Exhibit A shall not be effective unless set forth in writing and signed by both
parties. Further details for Exhibit A will be developed pursuant to the
progress review meeting process set forth in Section 2.1 below, or as otherwise
agreed between the parties.
1.6 Revenue Exclusions. For the avoidance of doubt, the Online Program
-------------------
will not include any revenues from digital downloading and distribution of song
files for sale (whether to current Muze database licensees or others). The
parties agree, however, with respect to digital download and distribution of
song files for sale and related matters that: (i) Muze currently has in place
agreements with many on-line sites licensed to use its databases for
compensation for any sale of music through digital downloading, and any later
agreement with Liquid on such digital sales shall not include revenue sharing by
either party; (ii) Liquid will create its own relationships with any such Muze
licensee on-line sites for digital distribution and downloading of music files;
and (iii) Liquid is not obligated to share the revenue it generates from this
distribution and downloading activity. In addition, Muze will be entitled to
continue to charge Online Program customers for use of Muze's database products
as services consistent with Muze's current practices.
2. Progress and Technical Reporting and Review; Limited Exclusivity of
-------------------------------------------------------------------
Arrangement.
- ------------
2.1 Progress Review Meetings. The parties shall, at the senior management
------------------------
level, review the overall progress of the Online Program no less frequently than
monthly. In addition to those set forth in Exhibit A, the parties may agree upon
milestones for the various phases of the Online Program, and each party shall
use reasonable commercial efforts to achieve all milestones and devote
appropriate resources and a high-level of priority to the Online Program. The
parties acknowledge that certain details of the development, commercialization,
and administration of the Program and other aspects of the Online Program cannot
yet be anticipated. However, any procedures that depart from the allocation of
rights and responsibilities set forth in this Agreement, including Exhibit A,
shall be implemented only by a signed, written amendment of this Agreement.
2
<PAGE>
2.2 Technical Review Meetings. The parties shall, at a technical
-------------------------
management level (senior engineer or higher), review progress of technical
aspects of the Online Program and report their results to each other in a format
and at intervals to be mutually agreed in writing.
2.3 Limited Exclusivity of Arrangement. During the term hereof, neither
--------------------------
party shall operate a service substantially the same as the Online Program.
Other than as expressly set forth in the immediately preceding sentence, neither
party shall be precluded from entering into any similar agreement, program,
alliance, collaboration, or licensing scheme with any third party or parties
regarding the subject matter of this Agreement. For the avoidance of doubt, Muze
shall be permitted to license its music database to third parties, including
links to sound clips that are not Linked Sound Clips, and Liquid shall be
permitted to encode sound clips and create links to music databases that are not
Muze databases.
3. Intellectual Property Rights and Ownership.
-------------------------------------------
3.1 Trademark Rights. Each party grants the other party the right to use
----------------
its trade name and logos solely in promoting and administering the Programs.
Each party covenants with the other that it will in such activities uphold the
high standards of quality and customer service associated with the other's trade
names and adhere to the reasonable trademark guidelines of the other party. Any
breach of this covenant shall be deemed a material breach of this Agreement, and
the parties acknowledge that such breaches may also entitle the aggrieved party
to injunctive relief. All other trademarks and branding developed for use in
connection with the Online Program shall be owned as the parties shall agree,
such agreement to be included in this Agreement as an attachment.
3.2 Independent Development and Ownership. Each party shall retain
-------------------------------------
ownership and control of its pre-existing intellectual property rights, lines of
business, and customers. Each party shall retain ownership of independently
developed intellectual property rights (i.e., developments created without use
of the other parties' intellectual property, including Confidential Information)
during the term of this Agreement. There shall be no joint development of
intellectual property rights under this Agreement unless expressly agreed to in
writing by the parties describing the joint development project and the terms
relating thereto.
3.3 Rights to Linked Sound Clips and Cross-License Among Parties. During
------------------------------------------------------------
the term of this Agreement, each party may retain and use a copy of the Linked
Sound Clips library for use only in conjunction with the Online Program. In
addition, Muze grants to Liquid a royalty-free, nonexclusive license to use the
Muze music database content in connection with the Online Program. Liquid grams
to Muze a royalty-free, nonexclusive license to use its encoding, file, server,
and delivery technology in connection with the Online Program. Such licenses
shall be extended on commercially reasonable terms upon termination or
expiration of this Agreement. Upon termination or expiration of this Agreement,
each party may retain a copy of the Linked Sound Clips library for any and all
purposes, with no duty to account to the other party. Except as expressly set
forth in this Agreement, no other rights or licenses are granted or implied
hereunder.
3
<PAGE>
4. Term and Termination.
---------------------
4.1 Term. The term of this Agreement shall be for two (2) years from the
----
Effective Date. This Agreement shall be renewed automatically for up to five
successive one-year periods unless either party notifies the other of its desire
to avoid such automatic renewal at least sixty (60) days prior to the end of the
term or any successive term.
4.2 Termination. Either party may terminate this Agreement for material
-----------
breach by the other party that remains uncured for more than thirty (30) days
after written notice specifying the breach. Either party may terminate this
Agreement upon written notice to the other party in the event of termination for
default by the other party of any other agreement between the parties. Any party
may terminate this Agreement upon written notice in the event that a voluntary
or involuntary petition in bankruptcy is filed by or against any party, or any
party makes an assignment for the benefit of creditors or is involved in any
other insolvency proceedings.
4.3 Effect of Termination. During the term of this Agreement and after
---------------------
termination or expiration of this Agreement, all rights to receive Linked Sound
Clips granted to third parties pursuant to the Online Program shall continue in
effect according to the terms of the agreement governing such services. Upon
termination or expiration of this Agreement: (i) each party shall retain its
copy of the Linked Sound Clips library, the assets allocated to each as may have
been agreed pursuant to Exhibit A, and all pre-existing rights; (ii) the parties
shall settle any revenue or expense sharing issues, as well as any asset
allocation issues (except for the Linked Sound Clips library, which may be
retained by both parties), as soon as practicable after such termination or
expiration, but in any event within ninety (90) days thereof; and (iii) if
requested by Muze, Liquid shall continue to host the Linked Sound Clips for a
period not to exceed ninety (90) days, as well as assist Muze during such period
in effecting a transfer (or replication, if applicable) of hosting and related
operations from Liquid (or the hosting service provider then in place) to Muze
(or Muze's designated hosting service provider), on commercially reasonable
terms. All rights and obligations that do not by their terms survive this
Agreement shall terminate.
5. Confidential Information.
-------------------------
5.1 Confidential Information. During the Online Program and in the
------------------------
development, commercialization, and operation of the Programs relating thereto,
the parties will have access to certain of each other's proprietary and
confidential information and materials, including, but not limited to, marketing
plans, strategies, software and/or hardware design, and other information and
materials developed by the parties or for them by third parties. Such
information shall be designated in writing as confidential, or if orally
disclosed, confirmed in writing as confidential within thirty (30) days of
disclosure ("Confidential Information").
5.2 Confidentiality Obligations. Nothing contained in this Agreement
---------------------------
shall grant any party rights to use any such Confidential Information of the
other parties in any manner except in the performance of this Agreement (i.e.,
in connection with the Online Program). Each party shall use at least a
reasonable degree of care in protecting the other party's Confidential
Information.
4
<PAGE>
Neither party shall disclose to any third party or make public in any manner any
Confidential Information of the other party without the prior written consent of
that party. Upon the expiration or prior termination of this Agreement, each
party shall return all Confidential Information of the other party in that
party's possession including all copies thereof, and shall continue to keep all
Confidential Information confidential.
5.3 Injunctive Relief. The parties acknowledge that breach of these
-----------------
confidentiality obligations may cause irreparable harm and that a non-breaching
party may be entitled to temporary restraint and/or injunctive relief to prevent
or limit any breach by the other party. In any such proceeding for injunctive
relief, no bond shall be required.
5.4 Exceptions. These obligations shall not apply to Confidential
----------
Information: (a) in the public domain (now or hereafter, unless through fault of
the party against whom enforcement of this provision is sought), (b) rightfully
disclosed to a party by a third party without obligation of confidentiality, (c)
required to be disclosed pursuant to a court order or other government
requirement, provided that the disclosing party is given reasonable opportunity
to seek a protective order or confidential treatment, or (d) independently
developed by the receiving party, as evidenced by that party's business records.
6. Indemnification.
----------------
6.1 Indemnification Obligations. Each party agrees to indemnify the other
---------------------------
party against claims by third parties arising out of the negligence or other
tortious conduct of such party or its employees or agents in performing under
this Agreement. The indemnitor shall have the right and obligation to conduct
the defense of any such claim, subject to: (a) the indemnitee's reasonable right
to participate, (b) the indemnitee's full cooperation in the defense, and (c)
the indemnitee's approval of any settlement that purports to bind it to a term
or condition that is not the payment of money damages (which shall be paid by
the indemnitor), which approval shall not be unreasonably withheld. If relevant,
the indemnitor shall resolve any material restriction on the indemnitee's
exercise of any rights licensed by the indemnitor, at the indemnitor's expense,
by (a) obtaining the necessary license from the third party or (b) providing a
non-infringing substitute or work-around to the indemnitee.
7. Miscellaneous Provisions.
-------------------------
7.1 Independent Contractors. The parties are independent contractors and
-----------------------
nothing contained in this Agreement shall be construed to create a relationship
of agent and principal, partners, joint venturers, or employer and employee.
7.2 Assignment. This Agreement may not be assigned without the prior,
----------
written consent of the other party, which shall not be unreasonably withheld,
except no consent shall be required for assignments to any party that acquires
or succeeds to all or substantially all of the assigning party's business or
assets.
5
<PAGE>
7.3 Governing Law. This Agreement shall be governed by the law of the
-------------
State of California applicable to contracts made and to be performed in the
State of California, without reference to the conflicts of laws principles
thereof.
7.4 Non-Solicitation. During the term of this Agreement and for a period
----------------
of one year thereafter, neither party shall solicit for employment, the
personnel of the other party without that party's written consent.
7.5 Entire Agreement. This Agreement is the entire agreement of the
----------------
parties hereto with respect to the subject matter hereof and shall not be
modified or amended except in writing signed by all parties.
7.6 Limitation of Liability. Other than as may arise from willful
-----------------------
misconduct, in no event shall any party be liable for any consequential,
incidental, indirect or special damages arising out of or related to this
Agreement or its termination, including without limitation lost data or lost
profits, regardless of whether such party has been advised of the possibility of
such damages and notwithstanding the failure of essential purpose of any limited
remedy. All software and services are provided on an as-is basis without
warranty, express or implied.
IN WITNESS WHEREOF, the duly authorized representatives of the parties have
executed this Agreement as of the date first written above.
MUZE INC. LIQUID AUDIO, INC.
By: /s/ Anthony Laudico By: /s/ Gerry Kearby
-------------------------- --------------------------
Anthony Laudico Gerry Kearby
Chief Executive Officer Chief Executive Officer
6
<PAGE>
EXHIBIT A
---------
Online Program, Revenue, & Expense Sharing Points
Revenue and Expense Sharing:
- ----------------------------
. Each party initially bears expenses associated with its responsibilities
under the Online Program
. Each party to share Online Program gross revenues equally
. Each party to account to the other and share Online Program expenses
equally
. Allocation of expenses to the Online Program to be determined according
to agreed-upon guidelines, to be attached to this Exhibit A; parties
each to use separate cost accounting for the Online Program
. Muze to pay expenses arising out of additional MP3 encoded output
destined for in-store listening systems (cost increment expect to be
_________); Muze to also pay for MP3 output program code development by
Liquid (expected to require one (1) engineering man-week)
. Each party bears 50% of capital expenditures (e.g., encoding hardware,
hosting facilities, CDs for encoding)
. Capital costs to be allocated, rather than shared, if accounting and/or
tax advantages dictate, as parties may agree
. Original CDs to reside at Muze's facility (copies at Liquid's facility)
Parties' Specific Responsibilities: Each party will assist the other in
- ----------------------------------
performing its primary responsibilities and the parties will work together to
find the most time- and cost-effective means of developing and promoting the
Program
<TABLE>
<CAPTION>
Muze Liquid Audio
<S> <C>
. License music database to Liquid and provide . License Liquid Music Server and encoding
integration support applications to Muze and provide training
. Obtain and provide to Liquid CDs for encoding . Encode music from CDs provided by Muze for
(both the initial Linked Sound Clips library and initial & new releases Linked Sound Clips
newly released CDs) library
. After Liquid encodes the initial Linked Sound . Create links to music database entries for
Clips library, jointly encode with Liquid new encoded files and supply links to Muze
releases as they become available, and
provide Liquid with a copy of the encoded files . Provide copy of encoded files to Muze
for hosting
. Host and provide all network operations for
. Maintain encoded file/database entry links Linked Sound Clips
library and provide to Online Merchants under
the Program . Provide primary technical support for Online
Merchants with respect to Program issues
. Participate in joint marketing efforts (with
respect to Muze customers, as primary . Assist Muze in setting up its own encoding
marketer) site once the initial Linked Sound Clips library
is encoded
. Appoint and empower a Project Manager
. Participate in joint marketing efforts
. Appoint and empower a Project Manager
</TABLE>
Timelines/Deliverables:
- -----------------------
. Muze to provide CDs at an ongoing rate sufficient to permit Liquid to meet
all encoding deadlines
7
<PAGE>
. Liquid to begin encoding by February 9, 1999, with 50,000 CDs to be encoded
by March 8, 1999 (in time for NARM)
. Liquid to encode 120,000 CDs by May 10, 1999, and continue thereafter at a
rate of 10,000 CDs per week until the initial library of Linked Sound Clips
for approximately 300,000 CDs is encoded.
. Parties to agree on expense sharing accounting guidelines in first Progress
Review Meeting or by February 19, 1999, whichever comes first
Technical Details
- -----------------
. Encoding to be AAC for 28.8 kbps and ISDN streaming rates
. Separate MP3 encoded files for 64 kbps streaming rate for use outside the
Program by Muze (for in-store listening systems)
Product Offerings (Planned and potential)
- -----------------
. Standard Online Program Linked Sound Clip hosting service
. Data mining services (with respect to Linked Sound Clips only)
. Only if necessary for competitive masons, a server and Linked Sound Clips
library product (not service)
. Linked Sound Clips library (AAC or MP3) for use in physical retail or similar
environments with listening systems not equipped for interactive audio
streaming (this product to be offered by Muze only)
Territory
- ---------
. Worldwide; i.e., exclusivity is also worldwide where and as a Muze database
is available for matching to any Linked Sound Clips; if Liquid encodes local
clips in an area for which no matching database is available from Muze, it
may match to local databases; the parties may also agree from time to time to
work together to create localized product offerings.
Branding
- --------
. All Liquid file format players distributed in conjunction with the Online
Program shall contain both Liquid and Muze Branding, in a format to be agreed
upon during the Progress Review Meetings.
8
