Software License and Marketing Agreement - Broderbund Properties LLC and Sonic Foundry Inc.
SOFTWARE LICENSE AND MARKETING AGREEMENT
Sonic Foundry Products
This Software License and Marketing Agreement (this "Agreement") is
entered into as of March 25, 2002, (the "Effective Date") between Broderbund
Properties LLC ("Broderbund"), a Delaware limited liability company, and Sonic
Foundry, Inc. a Maryland corporation ("Licensor").
WHEREAS, Broderbund is in the business of developing, distributing,
licensing, marketing and publishing computer software products in the form of
computer programs and written documentation relating to their use;
WHEREAS, Licensor is the creator of the consumer computer software
programs listed on Exhibit A to this Agreement and the related documentation;
and
WHEREAS, Licensor and Broderbund desire that Broderbund publish and
distribute the consumer computer software programs listed on Exhibit A, subject
to and in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. DEFINITIONS.
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1.1 "Affiliate" means, as to any person or entity, any other person
or entity that controls, is controlled by or is under common control with it
(whether by virtue of ownership, voting power, management or otherwise).
1.2 Intentionally omitted.
1.3 Intentionally omitted.
1.4 "Cost of Goods" means all costs and expenses associated with the
manufacture and delivery of the Products, including without limitation,
cartridges, floppy disks and CD-ROMs, external and internal packaging,
documentation, inserts, assembly, warehousing and manufacturing fees due to
third parties.
1.5 "Final Version" means a non-copy protected and unencrypted disk
master of a Product, recorded in executable object code form according to the
agreed upon specifications attached hereto as Exhibit C (the "Specifications")
with any necessary supporting software and data and which Broderbund accepts as
conforming in all material respects to the Specifications and is completely
debugged and tested. All Final Versions shall contain an updated privacy policy
in the
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End User License Agreement, which allows Licensor to share end user data with
Broderbund (the "End User Data").
1.6 "Licensed Media" means all computer-readable media now known or
hereafter to become known including, without limitation, magnetic media storage
devices, CD-I, CD-ROM, CD-DVD, laser discs, integrated circuit card or chip,
cartridges, interactive video discs, personal digital assistants (PDA),
electronic downloading, Internet and any other human or machine readable medium.
1.7 "Net Receipts" means gross monies actually received by
Broderbund from the sale or license of the Products less: (a) Cost of Goods (b)
taxes, duties, freight, shipping, handling, actual bad debt, and other
demonstrable costs incurred by Broderbund not directly attributable to the
purchase price of the Products but charged to its customers, and (c) the
following credits to the extent Broderbund reimburses these amounts: credits for
discounts (including price protection), replacements, returns, refunds, and the
like. Marketing expenses such as MDF, co-operative advertising, promotional
materials incurred by Broderbund shall be paid by Broderbund and shall not be
included in determining Net Receipts. The terms "sell," "sale," and other
similar terms, when used in this Agreement in conjunction with the Products will
mean the granting of a license or sublicense and will not be deemed for any
purpose to mean a transfer of title or other rights of ownership in any such
Products (other than the rights to use, reproduce and distribute as specifically
set forth in this Agreement).
1.8 "Product" or "Products" means the object code only of the
software programs identified on Exhibit A, including all data and resources
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therein, whether visual or numeric, for publication in the Licensed Media, and
all related documentation.
1.9 Intentionally omitted.
1.10 "SRP" of any Product means the Product's suggested retail price
established by Broderbund. The SRP of each Product as of the date hereof is
listed on Exhibit A and is subject to change at Broderbund's sole discretion at
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any time.
1.11 "Territory" means those countries identified on Exhibit A.
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1.12 "Update" means revisions, modifications, updates and corrected
versions for the Products that may be developed by Licensor, in its sole
discretion, during the Term of this Agreement and that consist of substantially
identical content to a previous version. Updates are usually designated by the
same numeric prefix but different numeric suffix (e.g., 1.3 would be an Update
to 1.2).
1.13 Intentionally omitted.
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2. LICENSE AND RIGHTS.
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2.1. Super Duper Music Looper Exclusive License. Subject to the terms
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of this Agreement, Licensor hereby grants to Broderbund the exclusive right and
license (except as noted herein) to publish, use, reproduce, have localized (by
Licensor, in Licensor's discretion, and at the rate of [*******] per hour plus
all associated costs) sublicense (to end users) and distribute (all at its own
cost) the Super Duper Music Looper product only and the associated trademarks
and trade names owned by or licensed to Licensor in the Licensed Media, for
sale, resale and/or license to end users throughout the Territory, in all
channels of trade including without limitation (a) directly to end users, and
(b) in the retail channel, including sales through dealers and distributors
(including license agreements with international distributors). Broderbund
acknowledges that Licensor currently distributes Super Duper Music Looper
through various distributors. As of the date hereof, Licensor shall no longer
fulfill distributor orders for such Product and will direct them to Broderbund;
however, Broderbund acknowledges that some amount of Super Duper Music Looper,
(not to exceed 850 units), will remain in various channels after the effective
date of this Agreement and that shall not constitute a breach of this Agreement.
2.2 OEM Non-Exclusive License. Subject to the terms of this
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Agreement, Licensor hereby grants to Broderbund the non-exclusive right and
license to publish, use, reproduce, have localized (by Licensor, in Licensor's
discretion, and at the rate of [******] per hour plus all associated costs)
sublicense and distribute the Products (including Super Duper Music Looper)
solely through arrangements with original equipment manufacturers ("OEMs"),
provided, however, such OEM deals shall only involve providing an OEM with a
disc containing one or more Products. Subject to the terms of this Agreement,
the rights granted hereunder include all marketing, production, retail,
wholesale, television offer, direct mail and telesales rights, and all other
sales and distribution rights for the Products.
2.3 Limitation on Exclusive License. Notwithstanding the rights
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granted above, Licensor retains the right to reproduce, license, sublicense,
translate and distribute the Super Duper Music Looper product directly (via
Licensor's catalog, website or other direct marketing efforts) and in the k-12
school channel either directly or through other distributors.
3. TITLE TO THE PRODUCTS AND INTELLECTUAL PROPERTY RIGHTS.
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3.1 Title to the Products. Licensor retains all right, title and
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ownership to the Products and no such rights shall pass to Broderbund, except to
the extent to which such rights are expressly granted to Broderbund under this
Agreement during the Term of this Agreement. However, all forms of Licensed
Media copies of the Products made by or for Broderbund, as well as any
collateral materials developed by Broderbund or for its benefit, shall be the
property of Broderbund.
*******Omitted and filed separately with the SEC
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3.2 Product Name and Title to Intellectual Property. Broderbund will
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market and distribute the Products under Licensor's names set forth on Exhibit
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A,
-
4. PRODUCT AND DOCUMENTATION.
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4.1 Delivery of Master Copies. On or before a Product's Delivery
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Date (as defined in, and identified on, Exhibit A), Licensor shall deliver to
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Broderbund two (2) master copies of the Final Version of the each of the
Products in both CD ROM and machine readable format.
4.2 End User Registration Information. Licensor will change its
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current End User License Agreement for the Products to inform users that End
User Data shall be shared with Broderbund for marketing purposes (such rights
include but are not limited to marketing of upgrades, Broderbund products or
products of third parties as well as allowing Broderbund to allow third parties
to use this information for similar purposes). Licensor shall provide End User
Data information to Broderbund on a monthly basis, including the name of the
Product purchased by each user. Broderbund will share End User Data, subject to
its privacy policy, customer consent and applicable law, for the purposes of
providing end-user technical support as provided in this Agreement. Neither
party will disclose, distribute, license or sell End User Data to any third
party without the consent of the other party.
5. PRODUCT UPDATES, UPGRADES AND SUPPORT.
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5.1 Updates. If Licensor releases an Update during the term of this
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Agreement, Licensor shall supply master disks or documentation to Broderbund
within twenty (20) after Licensor's first such release and Broderbund may elect
to begin immediately to market and sell the new version of the Product, at its
discretion. The Updated version of such Product shall be subject to all of the
terms and conditions of this Agreement. Licensor further agrees to notify
Broderbund in writing, and Broderbund agrees to inform Licensor in writing,
promptly upon the discovery of any defects or errors in the Program.
5.2 Engineering Resources. For any work Broderbund requests, and to
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which Licensor agrees, Licensor shall charge Broderbund [******] per hour.
5.3 Product Support. Broderbund's representatives and sub-licensees
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shall be responsible for all support of the Products to end-users and third
parties for initial contact and first level support issues and Licensor shall
provide second level technical support to Broderbund technical support staff as
outlined in Exhibit E. Licensor agrees to provide Broderbund's representatives
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with such reasonable assistance and technical support throughout the Term of
this Agreement (as defined in Section 9 below) as is reasonably necessary for
Broderbund to give support to end-users and third parties.
******Omitted and filed separately with the SEC
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6. ROYALTIES.
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6.1 Intentionally omitted.
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6.2 Regular Royalty. Except as provided in Section 6.3, 6.4 and 6.5
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Broderbund shall pay the royalty rates identified on Exhibit A on the Net
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Receipts derived by Broderbund from the sale of the Products (the "Royalty
Rate"). All royalties shall be subject to a fifteen percent [15%] royalty
reserve against returns. If Broderbund does not use the full amount of the
royalty reserve within 180 days from the quarter in which it is taken any excess
amount will be returned to Licensor with its next quarterly royalty statement.
Except as specifically provided on Exhibit A, any royalties to any third parties
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for any content, code, technology, and the like, included in the Products are
the sole responsibility of Licensor.
6.3 Royalty Exceptions.
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(a) Broderbund shall be entitled to use and distribute a
reasonable number of Products without charge for internal purposes, promotional
purposes, as sales inducements (other than as inducements to end users) or
otherwise to distributors, dealers, reviewers and others, and no royalties shall
be payable to Licensor on such Products. In no event shall Broderbund use the
Products as "loss leaders" or give the Products away for free or nominal value,
except as set forth above.
(b) No royalties shall be paid to Licensor on any revenue
derived from Broderbund's inclusion of any promotional information or
advertising placed on the Licensed Media.
6.4 Royalties on Bundling by Broderbund. In cases where Broderbund
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bundles a Product with other software programs for distribution by Broderbund
for a single price, the royalty payable to Licensor shall be calculated as
follows:
(a) Broderbund's SRP for the bundled Product shall be divided
by the sum of the then current SRPs for all of the software programs bundled in
the transaction in question. The resulting percentage shall be Licensor's share
of the transaction's Net Receipts for the bundled Product.
(b) Licensor's share of the transaction's Net Receipts shall
be multiplied by the Royalty Rate.
(c) If there is no established SRP for a product that is
included in such a transaction, Broderbund shall determine a commercially
reasonable SRP based on such factors as
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competitive products on the market, comparable products with equivalent
functionality, and lines of code contained in comparable products. If a
reasonable SRP for any title cannot be reasonably determined, the royalty shall
be determined by using the product of Net Receipts multiplied by a fraction, the
numerator of which is the sum of the number of Products in the Bundle, and the
denominator shall be the number of all titles in the Bundle.
6.5 Royalties on OEM Sales. In cases where Broderbund sublicenses the
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rights to manufacture a Product to an OEM or other similar distributor, the
license fee that Broderbund receives from such OEM for the Broderbund products
shall be pro rated among the Products sublicensed to such OEM according to the
number of units actually replicated and distributed each quarter.
7. Intentionally omitted.
8. TERMS AND CONDITIONS OF PAYMENT.
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Royalties will be paid in accordance with the provisions of Section 6
of this Agreement. Net Receipts shall be calculated and royalties shall be paid
to Licensor quarterly. Payments shall be accompanied by a reasonably detailed
royalty report showing the calculation of the royalties. All payments will be
issued within forty five (45) days after the closing of the applicable quarterly
period. Late payments shall bear interest at the rate of 1.5% per month or the
maximum allowed by law, whichever is less beginning twenty (20) days after the
date notice of late payment.
9. TERM AND TERMINATION.
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9.1 Term of Agreement. Unless terminated earlier pursuant to this
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Section 9 this Agreement shall have a term of Effective Date through March 15,
2004 (the "Term").
9.2 Intentionally omitted.
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9.3 Termination For Cause.
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(a) Bankruptcy. Either party may immediately terminate this
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Agreement upon written notice to the other party if proceedings in bankruptcy or
insolvency are instituted by or against the other party, or a receiver is
appointed, or if any substantial part of the assets of the other party is the
object of attachment, sequestration or other type of comparable proceeding, and
such proceeding is not vacated or terminated within sixty (60) days after its
commencement or institution.
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(b) Material Breach. Either party may terminate this
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Agreement if one party commits a material breach of any of the terms or
provisions of this Agreement and does not cure such breach within sixty (60)
days after receipt of written notice given by the other party.
9.4 Termination by Broderbund or Licensor. Broderbund may terminate
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this Agreement at any time by upon sixty (60) days prior written notice to
Licensor provided, however, termination by Broderbund shall not entitle it to a
refund of any portion of the Guaranteed Royalty, the obligation to pay same or
to pay any royalties due for Products licensed or sold before and after
termination. Licensor may terminate this Agreement only with respect to the
right granted to Broderbund to sublicense the Products in the OEM channel on
(90) days prior written notice to Broderbund, provided that the provisions of
Section 9.5 shall apply to any OEM sublicense agreement entered into by
Broderbund prior to the termination. In the event that Licensor exercises this
termination right, Broderbund will have no obligation to pay any unpaid
Guaranteed Royalty payments outlined in Exhibit A.
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9.5 Sell-Off Rights. Upon termination of this Agreement, Broderbund
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shall immediately cease all manufacturing of the Products; provided, however,
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that Broderbund may continue to market and sell any inventory in existence as of
the date of such termination for a period of nine (9) months after termination
and royalties shall be payable on such Products pursuant to Section 6. All OEM
sublicense agreements entered into by Broderbund prior to the expiration of this
Agreement shall continue in full force and effect after the expiration.
Notwithstanding the foregoing, in the event that Broderbund terminates this
Agreement pursuant to Section 9.3(b) above the sell-off period shall be eighteen
(18) months from the effective date of the termination.
9.6 Survival of Terms. Sections 3.1, 6, 9.5, 10, 12, 14 and 15 of
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this Agreement shall survive any termination of this Agreement.
10. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION.
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10.1 Licensor Warranties. Licensor represents and warrants to
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Broderbund the following:
(a) Licensor either owns all right, title and interest in or is
the exclusive licensee (with the right to grant the sublicenses) of the Products
and possesses the necessary rights to grant Broderbund the rights granted
hereunder.
(b) Licensor has the full power and authority to enter into this
Agreement and to fulfill its obligations hereunder and has not granted any
licenses that would prevent it from granting the rights set forth herein.
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(c) Licensor's performance of the terms of this Agreement and of
its obligations hereunder will not breach any separate agreement.
(d) Licensor has obtained all necessary releases, consents,
assignments and similar instruments in order to perfect its rights in the
Products.
(e) The Products do not infringe upon or misappropriate any
copyright, patent right, right of publicity or privacy (including but not
limited to defamation), trademark, trade secret or other proprietary rights of
any third party.
(f) The Products contain no matter that is obscene, indecent,
pornographic or otherwise inappropriate.
(g) The Products are Year 2000 compliant, which means that (i) no
value for current date will cause any interruption in operation, (ii) date-based
functionality must behave consistently for dates prior to, during and after year
2000, (iii) in all interfaces and data storage, the century in any date must be
specified either explicitly or by unambiguous algorithms or inferencing rules,
and (iv) year 2000 must be recognized as a leap year.
10.2 Licensor Indemnities. Licensor agrees to indemnify, hold harmless
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and defend Broderbund from all claims, liabilities, damages, defense costs
(including reasonable attorneys' fees), judgments and other expenses arising out
of or on account of:
(a) the alleged infringement or violation of any copyright,
patent right, right of publicity or privacy (including but not limited to
defamation), trademark, trade secret or other proprietary right with respect to
the Products, except to the extent such claim is based on Broderbund's actions
that modify or alter the Products or any of their trademarks;
(b) any unfair trade practice, defamation or misrepresentation
claim based on any promotional material, packaging, documentation or other
materials provided by Licensor with respect to the Products, except to the
extent such claim is based on Broderbund's actions that modify or alter the
Products; and
(c) the breach of any covenant, representation or warranty set
forth in this Agreement.
10.3 Licensor Indemnification Option. In the case of an infringement
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claim, at Licensor's option, Licensor may at its expense: (i) procure a license
from any claimants with respect to the challenged Product that will enable
Broderbund to continue marketing and using the Product, (ii) modify the
challenged Product so as to make it non-infringing, or (iii) take appropriate
action or seek available legal remedies to enable the continued manufacturing,
use and distribution of the challenged Product.
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10.4 Broderbund Warranties. Broderbund represents and warrants to
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Licensor the following:
(a) Broderbund possesses full power and authority to enter into
this Agreement and to fulfill its obligations hereunder.
(b) Broderbund's performance of the terms of this Agreement and
of Broderbund's obligations hereunder will not breach any separate agreement by
which Broderbund is bound.
10.5 Broderbund Indemnification. Broderbund agrees to indemnify, hold
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harmless and defend Licensor from all claims, liabilities, damages, defense
costs (including reasonable attorneys' fees), judgments and other expenses
arising out or on the account of any unfair trade practice, trade libel or
misrepresentation claim based on any promotional material, packaging,
documentation or other materials developed by Broderbund, to the extent such
materials are not based upon the Products or other materials provided by
Licensor.
10.6 Claims. With respect to any claims falling within the scope of
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the foregoing indemnifications:
(a) each party agrees to notify the other promptly of and keep
the other fully advised with respect to such claims and the progress of any
suits in which the other party is not participating;
(b) each party shall have the right to participate, at its own
expense, in the defense of a claim or suit made or filed against the other
party;
(c) each party shall have the right to assume any suit instituted
against it and to approve any attorneys selected by the other party to defend
such suit, which approval shall not be unreasonably withheld or delayed; and
(d) a party assuming or participating in the defense of a claim
or suit against the other party shall not settle such claim or suit without the
prior written approval of the other party, which approval will not be
unreasonably withheld or delayed.
10.7 LIMITATION ON LIABILITY, REMEDIES. EXCEPT AS EXPRESSLY PROVIDED
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IN THIS SECTION 10 WITH RESPECT TO INDEMNIFICATION, NEITHER PARTY SHALL BE
LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE
DAMAGES OF ANY KIND OR NATURE, INCLUDING LOST PROFITS, WHETHER SUCH LIABILITY IS
ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT
LIABILITY) OR
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OTHERWISE, EVEN IF EITHER PARTY HAS WARNED OR BEEN WARNED OF THE POSSIBILITY OF
ANY SUCH LOSS OR DAMAGE.
10.8 Third Party Infringement. It is understood and each party shall
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have the non-exclusive right to take prompt and all necessary actions against
any infringement of the Products. No settlement of such action shall be made by
either party without the approval of the other party, which approval will not be
unreasonably withheld or delayed.
11. OBLIGATION TO REPAIR.
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If, after valid acceptance of any Product by Broderbund, Broderbund
reports to Licensor a material error or defect in the performance of such
Product or the documentation including the manual for such Product, Licensor
will use its reasonable efforts to correct such error or defect within twenty
(20) days. If after said twenty (20) days, Licensor has not corrected the
problem, Broderbund shall give Licensor an additional ten (10) days' notice and
at the end of said ten (10) days if the material error or defect is not
corrected, Broderbund shall have the right to terminate this Agreement
immediately. In the event that Broderbund terminates this Agreement pursuant to
this Section 11, Broderbund will have no obligation to pay any unpaid Guaranteed
Royalty payments outlined in Exhibit A.
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12. ACKNOWLEDGMENTS.
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Licensor hereby agrees that Broderbund has full discretion with respect
to the marketing of the Products pursuant to the licenses granted herein
including, but not limited to, the licensing of the Products alone or as part of
a bundle of other software or related products, the pricing of the Products and
the distribution of the Products. Licensor also acknowledges that nothing in
this Agreement shall require Broderbund to begin to market, or, once begun, to
continue to market, the Products if Broderbund, in its sole discretion,
determines that it would not be commercially reasonable to do so; provided,
however, upon any failure of Broderbund to market such Products that continues
for more than a continuous period of thirty (30) days or more, then upon notice
Licensor may terminate this Agreement immediately.
13. ACCOUNTING.
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Licensor may request a certified audit of Broderbund's sales records
pertaining to the Products for the preceding four (4) full quarters to be
performed by an independent certified public accountant that (a) shall be
reasonably acceptable to Broderbund and (b) shall not be compensated on a
contingency basis or otherwise have any financial interest in the outcome of
such audit. Any such audit shall be at the expense of Licensor. Licensor may not
request such an audit more than one (1) time within any twelve (12) month
period. The accountant shall be required to execute a confidentiality and
non-disclosure agreement if requested by Broderbund and shall hold all
information confidential. The accountant may reveal to Licensor only the
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amounts of any underpayment. The accountant shall provide to Broderbund a final
report of its work, including both overpayment and underpayment information. The
audit shall take place at Broderbund's principal place of business in the United
States for domestic sales or at Broderbund's applicable international offices
for foreign sales, during normal business hours and at a mutually agreed upon
time. If the audit reveals that Broderbund underpaid the royalties payable with
respect to the period for which the audit was performed by an amount in excess
of 5% of the amount owed, Broderbund shall promptly pay to Licensor the amount
of such underpayment plus the reasonable cost of the audit (not to exceed
$15,000). Any dispute relating to the audit findings shall be subject to the
arbitration provisions in this agreement.
14. CONFIDENTIALITY.
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14.1 Confidential Information. All documentation and information
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designated in writing at the time of disclosure as proprietary or confidential
("Confidential Information") by the party disclosing the information (the
"Disclosing Party"), including without limitation drawings, source code,
computer program listings, techniques, algorithms and processes and technical
and marketing information, shall be treated confidentially by the recipient of
the Confidential Information and its employees (the "Recipient") and shall not
be disclosed by the Recipient without the Disclosing Party's prior written
consent. The terms of this Agreement shall be deemed Confidential Information
without further designation or marking.
14.2 Exceptions. Information shall not be considered to be Confidential
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Information if it (i) is already or otherwise becomes publicly known through no
act of the Recipient, (ii) is lawfully received from third parties subject to no
restriction of confidentiality, (iii) can be shown by Recipient to have been
independently developed by it, (iv) is disclosed by the Disclosing Party to
third parties without restriction on subsequent disclosure, or (v) is required
to be disclosed in the context of an administrative or judicial proceeding,
except that in such case the Recipient agrees to provide the Disclosing Party
with prompt notice of such requirement in order to allow the Disclosing Party to
seek an appropriate protective order.
14.3 Term of Confidentiality. The Recipient's obligations under this
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Section 14 shall survive the termination or expiration of this Agreement for a
period of two (2) years.
15. MISCELLANEOUS.
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15.1 Notices. All notices or other communications required or permitted
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to be given pursuant to this Agreement shall be in writing and shall be
considered as properly given or made (a) when received, if hand delivered, sent
by facsimile transmission (the receipt of which is confirmed) or sent by express
overnight courier service, or (b) two (2) business days after deposit in the
mail if mailed by first class mail, postage prepaid:
If to Broderbund, to: If to Licensor, to:
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Broderbund Properties LLC Sonic Foundry, Inc.
Attention: Chief Financial Officer 1617 Sherman Ave.
500 Redwood Boulevard Madison, WI 53704
Novato, California 94947 Attn: Brad Reinke
Telephone: (415) 382-4400 Telephone: (608) 204-8067
Facsimile: (415) 382-4572 Facsimile: (608) 204-8806
With a copy to: With a copy to:
Broderbund Properties LLC Sonic Foundry, Inc.
Attention: General Counsel Attn: General Counsel
500 Redwood Boulevard 1617 Sherman Avenue
Novato, California 94947 Madison, WI 53704
Telephone: (415) 382-4400 Telephone: 608.256.3133
Facsimile: (415) 382-4411 Fax: 608.204.8804
or to such other address as any such party may have designated by like notice
forwarded to the other party hereto.
15.2. Relationship Manager. Each of the parties shall designate a
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"relationship manager" who shall serve as the primary contact person for the
other party for purposes of this Agreement, including, without limitation, with
respect to any requests for marketing, sales, development, accounting, financial
or other information by any party, any complaints or any performance issues
relating to this Agreement. Each party shall cause its relationship manager to
be reasonably accessible to the other party, to meet from time to time with the
other party and to promptly respond to any requests or inquiries from the other
party. In the event of any absence of any relationship manager of any party,
whether due to vacation, illness or otherwise, such party shall promptly consult
with the other party regarding a replacement relationship manager and following
such consultation shall designate such replacement.
15.3 Injunctive Relief. Each party hereto further agrees that any breach
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of Sections 2, 10 or 14 of this Agreement is likely to result in irreparable
injury to the other, and each party agrees that the other shall be entitled, if
it so elects, to institute and prosecute proceedings in any court of competent
jurisdiction to enforce the specific performance of this Agreement by such
party, or to enjoin such party from activities in violation of this Agreement.
15.4 Entire Agreement. This Agreement contains the entire understanding of
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the parties hereto relating to the Products, supersedes any prior written or
oral agreement or understandings between the parties with respect to the
Products, and cannot be changed or
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terminated orally. This Agreement may be amended only by a writing signed by the
parties hereto.
15.5 Waiver. A waiver by either party of any term or condition of this
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Agreement in any instance will not be deemed or construed as a waiver of such
term or condition for the future or any subsequent breach thereof. All remedies,
rights, undertakings, obligations or agreements contained in this Agreement will
be cumulative and none of them will limit any other remedy, right, undertaking,
obligation or agreement of either party.
15.6 Enforceability. The invalidity or unenforceability of any provision
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of this Agreement will not affect the validity or enforceability of any other
provision of this Agreement.
15.7 Assignment. Neither this Agreement nor the rights or obligations
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hereunder may be assigned by a party without the other party's prior written
consent, which consent shall not be unreasonably withheld; provided however,
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that a party may assign this Agreement to an Affiliate or upon the merger of
that party or the sale of that party's business, all without the consent of the
other party, if the transferring party gives notice to the other party of such
assignment. In the event of such an assignment, this Agreement shall be binding
upon such successors and assignees.
15.8 Section Titles. The titles of the sections of this Agreement are for
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convenience only and will not in any way affect the interpretation of any
section or of the Agreement itself.
15.9 Independent Contractors. Licensor and Broderbund shall perform their
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duties pursuant to this Agreement as independent contractors. Nothing in this
Agreement shall be construed to create a joint venture, partnership or other
joint relationship between Licensor and Broderbund. Neither party shall have the
ability to incur any obligation on behalf of the other party.
15.10 U.S. Dollars. All dollar amounts herein are expressed in United
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States funds.
15.11 Governing Law. This Agreement and its validity, construction and
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performance shall be governed in all respects by the internal laws of the State
of California.
15.12 Broderbund Affiliates. The rights granted to Broderbund under this
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Agreement shall be deemed to include all Affiliates of Broderbund; and therefore
all references herein to "Broderbund" shall also refer to Broderbund's
Affiliates. Moreover, Broderbund shall remain liable and responsible to Licensor
hereunder for all actions and obligations of Broderbund and its Affiliates and
Licensor may, in its discretion, look solely to Broderbund for redress or other
relief hereunder.
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15.13 Force Majeure. Neither party shall be responsible for any failure to
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perform due to unforeseen, non-commercial circumstances beyond its reasonable
control, including but not limited to acts of God, war, riot, embargo, acts of
civil or military authorities, fire, flood, earthquake, accident, strike, or
shortage of fuel or energy. In the event of any such delay, any applicable
period of time for action by said party may be deferred for a period equal to
the time of such delay.
15.14 Contract Interpretation. Ambiguities, inconsistencies or conflicts in
-----------------------
this Agreement shall not be strictly construed against the drafter of the
language but will be resolved by applying the most reasonable interpretation
under the circumstances, giving full consideration to the parties' intentions at
the time this Agreement is entered into.
15.15 No Third Party Rights. This Agreement is not for the benefit of any
---------------------
third party, and shall not be considered to grant any right or remedy to any
third party whether or not referred to in this Agreement.
15.16 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
15.17 Press Releases. Licensor shall not make any public announcement or
--------------
issue any press release relating to this Agreement or the services to be
provided in connection therewith without the reasonable prior written consent of
Broderbund and subject to Licensor's obligations under law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed under seal as of the date first set forth above.
BRODERBUND PROPERTIES LLC SONIC FOUNDRY, INC.
By:____________________________ By:____________________________
Name: Name:
Title: Title:
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EXHIBIT A
1. Products and Royalty Rates:
--------------------------
Licensor will deliver the following Products that do not include any third party
content for which Broderbund will be obligated to pay any additional royalties
to any third parties. In addition, Licensor will deliver versions of the Sound
Forge(R) XP Studio, Acid Music and Video Factory that have the following
royalties to third parties. By way of example, Licensor will deliver one version
of Acid Music that contains third party content for which Broderbund will be
obligated to pay royalties and one version of Acid Music which does not contain
third party content for which Broderbund will be obligated to pay royalties.
------------------------------------------------------------------------------------------------------------------
Licensor Product Broderbund Version Application Royalty SRP
Name Product Name Rate
------------------------------------------------------------------------------------------------------------------
Acid(TM) Music Acid(TM) Music Most Win [******]% N/a
recent 98/2000/ME for OEM
/XP
------------------------------------------------------------------------------------------------------------------
Sound Forge(R) XP Sound Forge(R) Most Win [******]% N/a
Studio XP Studio recent 98/2000/ME for OEM
/XP
------------------------------------------------------------------------------------------------------------------
Video Factory(TM) Video Factory (TM) Most Win [******]% N/a
recent 98/2000/ME for OEM
/XP
-----------------------------------------------------------------------------------------------------------------
Acid(TM) Techno Acid(TM) Techno Most Win [******]% N/a
recent 95/98/2000/ for OEM
NT/ME/XP
------------------------------------------------------------------------------------------------------------------
Acid(TM) DJ Acid(TM) DJ Most Win [******]% N/a
recent 98/2000/ME/XP for OEM
/XP
------------------------------------------------------------------------------------------------------------------
Super Duper Music Super Duper Most Win [******]%
Looper(TM) Music Looper(TM) recent 95/98/2000/ in all
NT/ME/XP channels
------------------------------------------------------------------------------------------------------------------
Note: Regarding operating system compatibility, the current build of all
Products except for Super Duper Music Looper, have some features that will not
work in Windows 95 or NT.
Broderbund will be obligated to pay the royalties to third parties, specifically
identified below, for the Products, if Broderbund elects to distribute versions
of the Products that contain third
******Omitted and filed separately with the SEC
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party royalty bearing technology. These Products will be subject to the royalty
obligations described above plus the following amounts based on net units sold,
as follows:
Sound Forge XP Studio MP3 [******]
Acid Music MP3 [******]
Video Factory: MPEG I [******]
Broderbund shall pay these royalties directly to Licensor at the same time as
the royalties due to Licensor hereunder. Licensor must give thirty days prior
notice of any termination, modification or renewal of the agreements relating to
the third party content. If, during the term, the third party licenses are
renewed or altered resulting in a different royalty rate, Broderbund will pay
the new amount. Licensor shall be responsible for all royalty reporting and
payments to the third party licensors. Licensor agrees to indemnify and hold
harmless Broderbund from any claims relating to Licensor's failure to pay these
third party royalties, except to the extent such failure is the result of
Broderbund's failure to pay Licensor for such royalties.
Except for the third party royalties specifically described in this
Agreement, Licensor shall be solely responsible for any third party royalty
obligations relating to the Products to the extent Licensor decides to include
any third party technology in the Products that would require such additional
third party royalties.
2. Guaranteed Royalty. Broderbund guarantees that Licensor shall receive no
------------------
less than one hundred thousand dollars ($100,000) in royalties under this
Agreement in the first full year of the Agreement (the "Guaranteed Royalty"). If
after the first two full quarterly royalty periods, Licensor has not received
$50,000 in royalties from Broderbund, Broderbund will pay the difference with
the next quarterly royalty payment which shall be credited as an advance against
future royalties. If after four full quarterly royalty periods, Licensor has not
received $100,000 in royalties from Broderbund, Broderbund will pay the
difference with the next quarterly royalty payment, which shall be credited as
an advance against future royalties. The Guaranteed Royalty is non-refundable
under all circumstances and is due regardless of termination of this Agreement,
unless Licensor terminates the Agreement pursuant to Section 9.4 and in such
case the Guaranteed Royalty paid to date is not refundable, but Broderbund shall
not owe any Guaranteed Royalty not due and owing as of the date of termination.
3. Purchase of Super Duper Music Looper Products. Upon execution of this
---------------------------------------------
Agreement, Broderbund will issue a purchase order for 2,500 units of Super Duper
Music Looper at [******] per unit. Broderbund shall pay for these units net 30
days after delivery to Broderbund. As needed to fulfill customer demand,
Broderbund will purchase an additional 7,500 units of the Super Duper Music
Looper product on a consignment basis at [******] per unit. Broderbund
******Omitted and filed separately with the SEC
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will pay the per unit fee for these products within thirty (30) days of receipt
of payment by Broderbund from its customers with respect to the consigned
products. All products will be in resale condition. Broderbund shall receive a
credit for all Product that is not in resale condition. Broderbund will not pay
the [******]% royalty on these of Super Duper Music Looper products. Broderbund
will sell the Super Duper Music Looper products in the following order: 1) the
2,500 purchased units, 2) the 7,500 consignment units and 3) any units
manufactured thereafter.
4. Delivery Dates: Licensor will deliver fully functional and tested versions of
--------------
the Products and all documentation and other materials, including digital files,
and in-box manuals in PDF format, all suitable for replication within twenty
(20) business days following the Effective Date.
5. Territory: The World.
---------
******Omitted and filed separately with the SEC
17
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EXHIBIT B
Copyright and Trademark Notices
Broderbund will use the copyright and trademark notices as contained on
the Final Versions of the Products delivered by Licensor.
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EXHIBIT C
Specifications.
The Final Versions shall consist of the current versions of the Products listed
on Exhibit A, with the end user license agreements modified as required in
---------
Section 4.2. Broderbund shall be deemed to have accepted the Final Versions if
it does not provide Licensor with written notice to the contrary within thirty
(30) days of Licensor delivering such Products to Broderbund.
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EXHIBIT D
Intentionally omitted.
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Exhibit E
Technical Support
First Level Support
First Level Support will be resolved by Broderbund Technical Support department,
following these guidelines.
.. Broderbund technical support will be furnished with knowledge base content
of issues related to the operation of the program, including navigational,
how-to's, incompatibilities, etc., and the logs of calls history on all the
Products by Licensor.
.. Licensor will provide up to one week of training on the Products at
Broderbund's technical support facility at its sole expense.
.. Broderbund technical support will be furnished with access to all available
patches, software updates or other downloadable content that will be a
benefit to resolving the customer's issue.
.. All knowledge base and downloadable content will be placed out on the
Broderbund Support site for customer's to access for self-help.
.. The Broderbund representatives will answer customer's questions by using
the above-mentioned knowledge base content as well as using standard
operating system trouble shooting techniques.
.. If the issue was resolved using standard operating system trouble shooting
techniques, but is not in the knowledge base, Broderbund will add this as a
new issue for other representatives and customers to use in the future.
.. If, after these resources have been utilized, and the representative cannot
solve the customer's issue, the customer will be escalated to Second Level
Support.
Second Level Support
Second Level Support will be handled by Licensor, subject to the terms and
conditions of its then, if any, technical support. Broderbund technical support
staff will work directly with Licensor, ensuring that customer interface remains
only with Broderbund. The following are examples of the types of situations that
fall under second level support. Sonic Foundry, Inc. currently charges customers
for technical support at a rate of $3.00 for the first minute and $1.00 for each
additional minute. This policy and procedure would apply to Broderbund technical
support staff, after 10 hours of technical support provided free to Broderbund
technical support staff per month.
.. Any issue that cannot be resolved by using the content provided by Licensor
or by using standard operating system trouble shooting techniques.
.. Incompatibilities with newly released technologies, including operating
systems, hardware, and/or software applications that interact with the
program (i.e., Windows XP, Internet Explorer, printers, etc.). If a
solution is tested and proven to resolve the issue, the content can be
added to the Broderbund knowledge base for first level support.
.. Issues that originated from the design of the program that Broderbund is
not provided with a patch or solution to resolve the customer's situation.
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