<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A-1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-14007
SONIC FOUNDRY, INC.
(Exact name of small business issuer as specified in its charter)
MARYLAND 39-1783372
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
754 Williamson Street, Madison, WI 53703 (608)256-3133
(Address of principal executive offices) (Issuer's telephone number)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock par value $0.01 per share
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
Yes X No
----- -----
Revenues for fiscal year ended September 30, 1998 $7,469,658
The aggregate market value of the voting stock held by non-affiliates of the
Issuer's was approximately $24 million based on the last sale price on November
17, 1998.
The number of shares outstanding of the issuer's common equity was 2,665,935 as
of November 17, 1998.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1998 Annual Meeting of Stockholders are
incorporated by reference into Part III. A definitive Proxy Statement pursuant
to Regulation 14A will be filed with the Commission not later than January 29,
1999.
Transitional Small Business Disclosure Format (check one) Yes No X
----- -----
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Sonic Foundry, Inc.
Annual Report on Form 10-KSB
For the Year Ended September 30, 1998
TABLE OF CONTENTS
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PAGE NO.
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PART III
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Item 13. Exhibits and Reports on Form 8-K........................... 3
Signatures................................................. 5
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2
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ITEM 13(a) EXHIBIT LIST
<TABLE>
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NUMBER DESCRIPTION
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3.1 Amended and Restated Articles of Incorporation of the Registrant,
filed as Exhibit No. 3.1 to the Registration Statement, and hereby
incorporated by reference.
3.2 Amended and Restated By-Laws of the Registrant, filed as Exhibit No.
3.2 to the Registration Statement, and hereby incorporated by
reference.
4.1 Specimen Common Stock Certificate, filed as Exhibit No. 4.1 to the
Registration Statement, and hereby incorporated by reference.
4.2 Form of Warrant Agreement, including Warrant Certificate, filed as
Exhibit No. 4.2 to the Registration Statement, and hereby
incorporated by reference.
4.3 Form of Representatives' Warrant Agreement, including Specimen
Representatives' Warrant Certificate, filed as Exhibit No. 4.3 to the
Registration Statement, and hereby incorporated by reference.
10.1 Registrant's 1995 Stock Option Plan, filed as Exhibit No. 10.1 to the
Registration Statement, and hereby incorporated by reference.
10.2 Registrant's Non-Employee Directors' Stock Option Plan, filed as
Exhibit No. 10.2 to the Registration Statement, and hereby
incorporated by reference.
10.3 Commercial Lease between Registrant and The Williamson Center, LLC
regarding 740 and 744 Williamson Street, Madison, Wisconsin dated
January 20, 1998, filed as Exhibit No. 10.3 to the Registration
Statement, and hereby incorporated by reference.
10.4 Employment Agreement between Registrant and Rimas Buinevicius dated
as of November 30, 1997 and effective as of January 1, 1997, filed as
Exhibit No. 10.4 to the Registration Statement, and hereby
incorporated by reference.
10.5 Employment Agreement between Registrant and Monty R. Schmidt dated as
of November 30, 1997 and effective as of January 1, 1997, filed as
Exhibit No. 10.5 to the Registration Statement, and hereby
incorporated by reference.
10.6 Employment Agreement between Registrant and Curtis J. Palmer dated as
of November 30, 1997 and effective as of January 1, 1997, filed as
Exhibit No. 10.6 to the Registration Statement, and hereby
incorporated by reference.
10.7 Digital Audio System License Agreement between Registrant and Dolby
Laboratories Licensing Corporation dated July 28, 1997, filed as
Exhibit No. 10.7 to the Registration Statement, and hereby
incorporated by reference.
</TABLE>
3
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<TABLE>
<S> <C>
10.8 Digital Audio System License Agreement between Registrant and Dolby
Laboratories Licensing Corporation dated July 28, 1997, filed as
Exhibit No. 10.8 to the Registration Statement, and hereby
incorporated by reference.
10.9 Start-up Agreement between Registrant and Ingram Micro Inc. dated
October 16, 1997, filed as Exhibit No. 10.9 to the Registration
Statement, and hereby incorporated by reference.
10.10 Form of Lock-up Agreement between Registrant and all directors,
officers, and non-selling stockholders, filed as Exhibit No. 10.10 to
the Registration Statement, and hereby incorporated by reference.
10.11 Form of Lock-up Agreement between Registrant and all selling
stockholders, filed as Exhibit No. 10.11 to the Registration
Statement, and hereby incorporated by reference.
10.12 Software License Agreement, effective as of September 29, 1998,
between Registrant and Hewlett-Packard Company
27.1 Financial Data Schedule filed as Exhibit No 27.1 to the Annual Report
on Form 10-KSB, and hereby incorported by reference.
</TABLE>
ITEM 13(b) REPORTS ON FORM 8-K
None
4
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PORTIONS OF THIS DOCUMENT INDICATED BY. ** HAVE BEEN OMITTED PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT SUBMITTED BY THE REGISTRANT
SOFTWARE LICENSE AGREEMENT
This Software License Agreement (the "Agreement") is made effective this 29th
day of September, 1998 (the "Effective Date") between Sonic Foundry, Inc., a
Maryland corporation ("SONIC FOUNDRY"), and HEWLETT-PACKARD COMPANY, a Delaware
corporation ("HP").
1. DEFINITIONS
-----------
1.1. "Program(s)" means those software programs of SONIC FOUNDRY to be
developed and delivered to HP as set forth in Section 2 and Exhibit A,
together with Error Corrections and any Enhancements that are accepted
by HP according to the procedures in this Agreement.
1.2. "Documentation" means that documentation set forth in Exhibit A
together with equivalent documentation delivered to HP for all
Enhancements accepted by HP.
1.3. "Enhancement" means that any enhancement, modification, update, new
version or new release of a Program, other than Error Corrections.
1.4. "Error Corrections" means all bug fixes or error correction for the
Programs.
1.5. "Object Code" means any machine executable code derived in whole or in
part from the Program.
1.6. "HP Products" means any HP product and their successors and
replacements.
1.7. "HP CPSS Technology class of products" means CD and or DVD Writeable
and or ReWriteable Drives and or CD and or DVD Writeable and or Re-
Writeable Software Recording Solutions whether bundled with one
another or stand alone.
2. DEVELOPMENT AND DELIVERY
------------------------
2.1. SONIC FOUNDRY agrees to develop and deliver to HP the software
programs and documentation set forth in Exhibit A, in accordance with
the deliverables and milestones set forth in Exhibit A and in
accordance with the Test Requirements set forth in Exhibit A.
2.2. SONIC FOUNDRY shall deliver all Error Corrections to HP as soon as it
delivers such Error Corrections to any other customer or in accordance
with the procedures set forth in the Support section below, whichever
is earlier.
3. COMPATIBILITY
-------------
3.1. SONIC FOUNDRY agrees to ensure that Programs are fully compatible with
those HP products identified in Exhibit A, and their successors or
replacements.
3.2. SONIC FOUNDRY agrees to ensure that the current version of the Program
being distributed by HP is fully compatible with the latest version
of the operating systems set forth in Exhibit A within the time frames
described in Exhibit A.
HP and SONIC FOUNDRY Confidential Page 1 Initials________
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4. EVOLUTION AND NEW PROGRAMS
--------------------------
4.1. SONIC FOUNDRY agrees to release all enhancements or modifications
(except for those SONIC FOUNDRY creates for a specific, custom end
user) to the Program(s) or to any SONIC FOUNDRY's software program
which corresponds to the Program, as an Enhancement. The commercial
release date for the Enhancement shall be no later than any other
commercial release of such functionality.
4.2. At least ten (10) days prior to the release of an Enhancement, SONIC
FOUNDRY agrees to notify HP and, upon beta release, deliver to HP a
complete copy of it to HP. If HP requests a copy for acceptance
testing then SONIC FOUNDRY shall deliver a copy of the final version
to HP, at least seven (7) days prior to commercial release, for
acceptance testing in accordance with paragraph 5 below together with
a copy of documentation equivalent to that set forth in Exhibit A.
5. ACCEPTANCE
----------
5.1. HP shall have thirty (30) days from the date of receipt of a complete
copy of the Initial Program or an Enhancement to either accept,
return for rework, or reject it. A "complete copy" as used in this
Agreement shall include a copy of the program in object code,
documentation (or equivalent) for the program in at least manuscript
form, and any documentation regarding the program which HP reasonably
requests to accomplish its evaluation. HP shall be entitled to test
and evaluate any program by whatever means it deems appropriate
consistent with SONIC FOUNDRY's rights in the program, and SONIC
FOUNDRY hereby grants to HP any licenses necessary for HP to perform
its evaluation. If HP returns a program for rework, SONIC FOUNDRY
agrees to take reasonable steps to correct the listed defects and
resubmit the program for re-evaluation under the same acceptance
procedure. In the event HP rejects a Program, it shall give SONIC
FOUNDRY written notice of rejection stating the reasons for its
unacceptability. SONIC FOUNDRY has full authority to commercially
release any and all Enhancements to the Program at its own discretion
and without approval from HP.
5.2. In the event HP accepts an Enhancement then it shall be added to this
Agreement. At its discretion, HP shall have the right to refuse to
add any Enhancement to this Agreement even if it satisfies the
technical requirements in this Agreement. In the event HP rejects an
enhanced or modified Program, HP shall be entitled to continue to
distribute the previous versions of that Program.
6. RIGHTS GRANTED
--------------
6.1. Object Code. SONIC FOUNDRY hereby grants to HP and HP's subsidiaries
a non-transferable, worldwide license to use, reproduce and have
reproduced, and distribute through all channels of distribution the
Programs in Object Code with the right to sublicense such rights, but
(save for Error Corrections) only as bundled with the HP Products.
6.2. **
HP and SONIC FOUNDRY Confidential Page 2
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6.4 Documentation, SONIC FOUNDRY hereby grants to HP and HP's subsidiaries
a non-exclusive, non-transferable, worldwide, fully paid up license to
use, reproduce, have reproduced, create derivative works and
distribute through all channels of distribution the Documentation,
with the right to sublicense such rights but solely in conjunction
with the HP Products.
6.5 No title or ownership in the Program(s) is transferred to HP. Nothing
in this Agreement shall be construed to preclude HP from independently
developing, acquiring or marketing computer software packages which
may perform the same or similar functions as those software packages
provided by SONIC FOUNDRY. Similarly, this Agreement shall not
preclude SONIC FOUNDRY from entering into a similar agreement with
third parties for distribution of the Programs
6.6 No trademark licenses are granted under this Agreement. However, HP
agrees that it will submit marketing material using Sonic Foundry's
trademarks to Sonic Foundry for approval. Such approval will not be
unreasonably withheld. If Sonic Foundry does not respond within (2)
business days of submission by HP, such non-response will be deemed as
an approval.
7. MANUFACTURING AND MARKETING
7.1 HP will perform all manufacture, reproduction and assembly of the
Programs and Documentation.
7.2 SONIC FOUNDRY agrees to supply HP, without additional charge, a Gold
master of the Program(s) and an electronic copy of the Documentation.
8. PRODUCT MAINTENANCE AND SUPPORT
8.1 SONIC FOUNDRY agrees to provide the support set forth in Exhibit C.
8.2 The maintenance and support obligations of SONIC FOUNDRY provided for
in this Section shall run for the period of this Agreement and, for
Error Corrections, shall continue for a period of one year after
termination of this Agreement.
9. PAYMENT
9.1 HP agrees, except as set forth below, to pay SONIC FOUNDRY a royalty
for each Program used internally or licensed to third parties by HP.
No royalty shall be due for any item subsequently returned for a
refund or other adjustment. No royalty shall be due for any program
used by or distributed by HP for reasonable promotional, training or
support purposes. The royalty for all Program(s) throughout the term
of this Agreement is set forth in Exhibit B. Notwithstanding the
foregoing, it is agreed by SONIC FOUNDRY that for HP Products which
are external drive products, that a single royalty shall be due for
any copy shipped with such HP Product or any upgrade copy but that end
user will be authorized to make multiple copies of the software to
support the end user customers use of the HP Product to the extent
authorized by HP's end-user Agreement.
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9.2. Royalties shall be payable monthly following shipment. Payments due
SONIC FOUNDRY shall be made within thirty days following the HP month
of shipment. Payment shall reflect royalties for all copies of
Programs licensed during the previous month any recoverable fees
already paid by HP and any credit for returns or other adjustments.
9.3. Upon removal of the HP Product from HP's Corporate Price list, HP
reserves the right to bill back returned product for up to 90 days.
9.4. SONIC FOUNDRY may, at its sole option and expense, engage an
independent auditor mutually acceptable to HP for the purpose of
verifying royalty payments. HP will maintain appropriate records
which will be made reasonably available to the auditor. SONIC FOUNDRY
may only exercise this right on an annual basis.
9.5. HP shall be solely responsible for all taxes relating to distribution
of the Program, including use, sales, withholding and property taxes.
SONIC FOUNDRY shall be responsible for all taxes on royalties and
license fees paid to SONIC FOUNDRY under this Agreement, including
use, sales, income, withholding and property taxes.
10. CONFIDENTIAL INFORMATION
------------------------
10.1. Neither party desires the confidential information of the other and
each agrees to resolve issues arising under this Agreement with
nonconfidential information whenever possible.
10.2. If during the term of this Agreement either party requires access to
information which the other party considers confidential or
proprietary, each party must first agree in writing to disclose and
receive the information in confidence. If then disclosed, the
information shall be labeled [HP or SONIC FOUNDRY] Confidential
Information and shall be used by only those employees of the
receiving party who have a need to know such information for purposes
related to this Agreement. The information shall be safeguarded for
two years following receipt against disclosure to third parties by
employing the same degree of care as the receiving party uses for its
own similar information, but no less than a reasonable degree of
care. No such obligations of confidence shall extend to information
which: was in the receiving party's possession before receipt from
the disclosing party; is or becomes a matter of public knowledge
through no fault of the receiving party; is rightfully received by
the receiving party from a third party without a duty of
confidentiality; is disclosed by the disclosing party to a third
party without a duty of confidentiality on the third party; is
independently developed by the receiving party; is disclosed under
operation of law; or is disclosed by the receiving party with the
prior written approval of the disclosing party.
10.3. All shipment volumes, forecasts and other HP shipment information are
confidential and will be treated as confidential information.
11. WARRANTY AND INDEMNIFICATION
----------------------------
11.1. SONIC FOUNDRY warrants it has full power and authority to grant HP
the rights granted herein, the Program(s), Documentation, trademarks,
copyrights and trade names referred to in this Agreement do not
violate or infringe any third party intellectual property rights, and
that the Programs referred to herein will operate in accordance with
their specifications and Documentation.
11.2. SONIC FOUNDRY agrees to indemnify and hold HP harmless of and from
any and all loss, cost, claim, liability, suit, judgment or expense,
including reasonable attorneys' fees, arising out of any breach of
the above described warranties.
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11.3. SONIC FOUNDRY will defend any claims, suit, or proceeding brought
against HP or its customers insofar as it is based on a claim that
(i) any Program or Documentation, or any part thereof, furnished by
SONIC FOUNDRY under this Agreement constitutes an infringement of any
patent, copyright, trademark, trade name, unauthorized trade secret
use, or any other intellectual property right, or (ii) the
performance or non-performance of the Programs; if notified promptly
in writing of such claim, and given authority, information and
assistance (at SONIC FOUNDRY's expense) to handle the claim the
defense of any suit or proceeding, and SONIC FOUNDRY agrees to pay
all damages and costs awarded therein against HP and its customers.
In case any Program or documentation or any part thereof is in such
suit held to constitute an infringement and its use is enjoined,
SONIC FOUNDRY shall, at its own expense and at its option, either
procure for HP and its customers the right to continue use or, if
applicable, replace the same with a noninfringing Program and
documentation of equivalent function and performance, or modify them
so they become noninfringing without detracting from function or
performance. This Section states SONIC FOUNDRY's entire liability to
HP for infringement of third party intellectual property rights.
11.4. EXCEPT AS EXPRESSLY PROVIDED HEREIN, SONIC FOUNDRY MAKES NO OTHER
WARRANTIES, EITHER EXPRESS OR IMPLIED, REGARDING THE PROGRAMS, AND
SONIC FOUNDRY SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANT
ABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
12. TERM AND TERMINATION
12.1. This Agreement shall expire upon the removal by Hewlett Packard of
the last Hewlett Packard product on the Corporate Price List, however
in no event later than May 31, 2000.
12.2. The non-breaching party may terminate this Agreement by notice if the
other party breaches any provision of this Agreement and if such
breach is not cured within thirty (30) days of notice from the non-
breaching party advising of such breach.
12.3. All obligations concerning confidentiality, support, warranties,
indemnities, limitations of liability and all end user licenses shall
survive termination of this Agreement. Further, HP may continue to
distribute its then current inventory of Programs.
13. LIMITATION OF LIABILITY
13.1 EXCEPT TO THE EXTENT OF THE INDEMNIFICATION PROVISIONS ABOVE, IN NO
EVENT SHALL EITHER PARTY BE LIABLE FOR CONSEQUENTIAL OR SPECIAL
DAMAGES (INCLUDING LOSS OF PROFITS) WHETHER BASED ON CONTRACT, TORT,
OR ANY OTHER LEGAL THEORY.
14. MISCELLANEOUS PROVISIONS
14.1. HP agrees not to export or re-export the Programs or any copy or
adaptation in violation of the U.S. Export Administration regulations
or other applicable regulation.
14.2. SONIC FOUNDRY and HP are strictly independent contractors and shall
so represent themselves to third parties. Neither party has the right
to bind the other in any manner whatsoever and nothing in this
Agreement shall be interpreted to make either party the agent or
legal representative of the other or to make the parties joint
venturers.
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14.3. HP shall have the authority to market or not market the Programs as
it deems appropriate. Nothing in this Agreement shall be construed or
interpreted as placing a "best efforts" standard upon HP with respect
to the marketing of any of the Programs.
14.4. All notices required under this Agreement shall be in writing and
shall be considered given upon personal delivery, forty-eight (48)
hours after sending by air courier, or seventy-two (72) hours after
deposit in the United States Mail, certified mail return receipt
requested or equivalent, addressed to the appropriate Account
Manager.
14.5. This Agreement is made under and shall be construed in accordance
with the laws of the State of California, excluding its conflicts of
laws provisions. The parties hereby waive any constitutional,
statutory, or common law right of trial by jury.
14.6. SONIC FOUNDRY agrees not to publicize or disclose to any third party
without the consent of HP the terms of this Agreement.
14.7. The headings of Sections of this Agreement are for reference only and
are not to be construed in any way as terms.
14.8. SONIC FOUNDRY may not assign or transfer any of the rights or
responsibilities set forth herein without the express written consent
of HP and any purported attempt to do so shall be deemed void. If
SONIC FOUNDRY is acquired by another entity, HP agrees not to
unreasonably withhold consent to the assignment of this Agreement
subject to agreement as assurances satisfactory to HP of adequate,
technical support for HP Programs including the agreement of key
SONIC FOUNDRY personnel to fulfill the obligations of support.
14.9. A party's failure to exercise any of its rights hereunder shall not
constitute or be deemed a waiver or forfeiture of any such rights.
14.10. This document represents the entire agreement between the parties as
to the matters set forth and integrates all prior discussions or
understandings between them.
14.11. The invalidity or unenforceability of any term of this Agreement
shall not in any way affect the remaining terms which shall remain in
full force and effect and the parties will negotiate in good faith a
substitute provision which most nearly effects the parties intent in
entering into this Agreement.
Agreed:
SONIC FOUNDRY HEWLETT-PACKARD COMPANY
By: /s/ Rimas P. Buinevicius By: /s/ Jerry Shea
- ---------------------------- --------------------------
Typed Name: Rimas P. Buinevicius Typed Name: Jerry Shea
Title: Chairman & CEO Title: General Manager CPSS
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EXHIBIT A
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LICENSED SOFTWARE
- --------------------------------------------------------------------------------
For this agreement, SONIC FOUNDRY'S ACID Music (version 1.0) will comply with
the specifications below.
[_] Localization
The program will be localized in English, French, Italian, German, Spanish,
Swedish, Dutch, Brazilian Portuguese and UK English for tutorials.
All manuals will be localized in the same languages in electronic PDF
(Acrobat) format.
All aspects of the product must be localized (except file names) including
software, auto loading demo song, installation, manuals, on-line help,
support materials, etc. All localized versions of the software must be
released simultaneously with the English version and UK English for demo
song.
[_] Product System Requirements
Compatible and certified with Microsoft Windows 95, Windows 98, and
Windows NT 4.0 including Windows logo Certification. If a new version of an
Operating System (such as NT 5.0) is released during the term of the
Agreement, SONIC FOUNDRY will provide a compatible product within 90 days
of the commercial release during the term of the Agreement.
Year 2000 Compliance Warranty.
Subject to the limitation of liability contained in this Agreement, SONIC
FOUNDRY Warrants to HP that the Software Products licensed under this
Agreement, when used in accordance with the Documentation, are capable of
correctly processing, providing, and receiving date data within and between
the twentieth and twenty-first centuries, provided that all other products
used by the End User in connection or combination with the Software
Products including without limitation, hardware, software and firmware,
properly exchange date data with the Software Products. This warranty shall
not apply to any problems arising as a result of modification of the
Software Products by anyone other than SONIC FOUNDRY. This year 2000
Compliance warranty will remain in effect through December 31, 2000,
Notwithstanding any other warranty period specified in this Agreement.
[_] Specific Program Description
. The product will be branded as SONIC FOUNDRY ACID Music (version 1.0).
. See Attached Functional Specification.
SONIC FOUNDRY shall provide the application(s) by the following dates:
**
The product shall be delivered to HP on CD (see attached Functional
Specification) that may be taken directly to the duplicators. The manual
shall be provided on-line in electronic format on the CD.
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Regions and Languages are as follows:
Americas: English, French, Italian, Spanish and Brazilian Portugese.
Northern Europe: English, German, Swedish and Dutch.
Southern Europe: Same disc as Americas.
Asia Pacific: Same disc as Americas.
[ ] HP Products
**
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EXHIBIT B
- -------------------------------------------------------------------------------
PAYMENT SCHEDULE
- -------------------------------------------------------------------------------
**
<PAGE>
EXHIBIT C
- -------------------------------------------------------------------------------
CUSTOMER SUPPORT
- -------------------------------------------------------------------------------
Timely & Knowledgeable Maintenance and Support Service
- ------------------------------------------------------
**
In addition to the support locations and support offerings, SONIC FOUNDRY must
ensure that the level of support meets or exceeds the expectations of HP's
customers and is provided in a timely manner that will not adversely impact HP's
support centers. Currently, SONIC FOUNDRY is providing a level of support for
it's customers that meets the expectations of HP's customers. SONIC FOUNDRY must
continue this level of support to ensure there are minimal negative impacts to
HP customer support centers or HP's customers. If HP receives complaints from
customers about the timeliness of SONIC FOUNDRY support or the quality of that
support, HP will identify these issues to SONIC FOUNDRY and SONIC FOUNDRY will
take corrective actions to resolve these issues. Once the issues have been
identified, SONIC FOUNDRY shall provide a corrective action plan within 30 days.
Technical and Emotional Escalations
- -----------------------------------
SONIC FOUNDRY shall identify a point of contact in each region for technical and
emotional escalations. HP will also identify a point of contact in each region
for escalations. These identified individuals will be responsible for
communicating and resolving customer escalations, both emotional and technical.
Once a customer escalation has been resolved, the responsible individual will
provide feedback to the other company that will ensure that the escalation has
been resolved.
An integral part of the detailed process will be the development of processes
for handling customer issues that are a result of bugs or problems in either the
hardware or software. When these situations arise each company is committed to
providing error correction information when possible, a work around when
necessary, and schedules for implementation of corrective action. It is
anticipated that an issues database will be maintained that will provide this
information to each company on the status of current "bugs" or technical issues
that affect our customers.
Train-the-Trainer
- -----------------
In order to provide the level of support for our customers that they expect,
both HP and SONIC FOUNDRY will have to provide training for each other on their
respective products. The standard call process requires that HP support
technicians support the HP hardware and that SONIC FOUNDRY support technicians
support the ACID Music software. HP has support technicians worldwide that must
receive the same level of training and SONIC FOUNDRY has a similar training
issue. In order to accomplish worldwide training each company will provide
training to the other's trainers. This will allow HP to customize the training
on ACID Music to meet HP's worldwide technical requirements. SONIC FOUNDRY will
provide HP with training support that will include product samples, technical
information and on-line access to our internal technical support staff,
Physical, in-
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person training will also be provided as necessary. HP will provide SONIC
FOUNDRY with an ISV Training Kit that will clearly identify the specific items
that SONIC FOUNDRY must provide to HP trainers. SONIC FOUNDRY will be provided
with similar technical material to support their training needs. Upon execution
of this agreement both HP and SONIC FOUNDRY will identify the individual that is
responsible for training development so that the training development can begin
immediately.
Additional Requirements to Meet the Needs of Customer Support
- -------------------------------------------------------------
Bugs and Fixes: SONIC FOUNDRY is responsible for submitting a list of known
issues and fixes or work around for the gold master software at the time the
gold master software is submitted. HP is responsible for submitting a list of
known issues and fixes or work around for the hardware at the time the hardware
is submitted. All issues contained in the gold master software or hardware must
be below weight five or have a waiver from Hewlett-Packard Company and/or SONIC
FOUNDRY. SONIC FOUNDRY gives HP the right distribute these fixes or work around
to its customers and partners in any way Hewlett-Packard deems fit.
White Papers: All white papers relating to the software vendor's product will be
submitted to Hewlett-Packard Company with the gold master of the software. All
white papers relating to HP's product will be submitted to SONIC FOUNDRY with
the final release of the hardware.
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EXHIBIT D
- -------------------------------------------------------------------------------
ACCOUNT MANAGERS
- -------------------------------------------------------------------------------
[ ] Sonic Foundry
Name:
Title:
Address: **
Phone:
Fax:
[ ] Hewlett Packard
Name:
Title:
Address: **
Phone:
Fax:
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[LOGO OF HEWLETT-PACKARD] [LOGO OF SONIC FOUNDRY]
ACID Music
for Windows 95/98 and NTWS 4.0/5.0
Functional Requirements Specification
Hewlett Packard, Sonic Foundry
September 28, 1998
<PAGE>
Purpose
To provide a music creation application which allows Windows 95/98 and NT users
to burn their musical "masterpieces" directly to CD-R/RW. The initial
opportunity is to ship with HP drives**
Product Description
This music creation application, currently called ACID Music, will be a
loop-based music tool which helps users create songs, rhythms, jingles, wraps,
hymns, ditties, descants, chants or other audio compilations. The product will
allow the user at lease 24 tracks of loops per song. The users may save their
creations in .WAV, or .ASF output as well as burn their songs directly to CD in
Red Book audio format in the track-at-once format using Sonic Foundry's
technology.
Content that is provided with the ACID Music application may be used for
personal or commercial use in an unrestricted manner (according to Sonic
Foundry's End User License Agreement). Other content may be purchased from Sonic
Foundry, such as "Loops for Acid" but may be subject to different end user
agreements.
Content will be organized by genre, style or type of music.
A special start up ACD file will be loaded the first time the program is ran
with loops as a tutorial.
Product Name and Branding/Versioning
ACID Music-Audio Creation in Digital
As ACID Music will be a modified for HP to include the CD burn capabilities, a
version unique version number will be designated in the Help About box.
The copyright will reference "Sonic Foundry," as the copyright holder and will
reference 1998 as the copyright date.
Languages
The product and manuals will be provided in English, French, Italian, German,
Spanish, Swedish, Dutch, Brazilian Portuguese, (UK English for tutorials). Due
to the nature of this product, it is not expected that file names will be
translated.
HP will recommend to Sonic Foundry its translation house (SDL) for localization.
Operating Environments
The product will operate under Windows 95 (All Service Releases), Windows 98,
and Windows NT Workstation 4.0 (Service Releases 3 or higher). If version 5.0 of
NT Workstation is released during the term of the Agreement, a compatible (not
necessarily logo'd) product or patch will be released to HP customers free of
charge within 90 days of the release of the operating system.
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Installation
The product will not be integrated into HP's Installation set but rather will be
a stand alone disc that is provided ** Installation will be a multi-language
install by region.
Logo Requirements
The product must meet the Microsoft "Designed for Windows 95/98/NT" logo
requirements. Because Logo requirements are changing soon and will include the
additional requriment for NT 5.0 it is important that logo certification be done
as soon as feasible. Details of logo requirements can be obtained at
http:www.microsoft.com/windows/thirdparty/winlogo/.
Device Support
This product will support the HP 7200i, 7200e, 8100, 8200, 7300 and 7400 drives.
Delivery of Product
Sonic foundry shall provide the application(s) by the following dates:
**
The product shall be delivered to HP on CD (2 CDs) that may be taken directly to
the duplicators. The manual shall be provided on-line in electronic format on
the CD. Regions and Languages are as follows:
Americas: English, French, Italian, Spanish, and Portuguese.
Northern Europe: English, German, Swedish and Dutch.
Southern Europe: Same disc as Americas.
Asia Pacific: Same disc as Americas.
Electronic Upgrade Capability
Electronic upgrade capability may be provided by Sonic Foundry at their
discretion.
http://www.sonicfoundry.com.
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Customer Support
Auto loading demo song at startup for usability.
Exclusivity
(covered in contract)
Other
File(s) in the box for loop packs, effects and plug-ins, how to use in business
environment.
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