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 0000
Xxxxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxx 00000 X.X.X. ("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 XxxXxxx 0 Xxxxxxxx,
0X, 000 Xxxxxx 0-Xxxx, Xxxxxxx-Xx, Xxxxx, 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.
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: Xxxxxx Xxxxx
Liquid Audio, Inc.
0000 Xxxxxxxx, Xxxxxxx Xxxx
Xxxxxxxxxx, 00000 X.X.X.
Fax: (0-000) 000-0000
SKM: Attn: Kyu Xxx Xxx
SKM Limited
XxxXxxx 0 Xxxxxxxx, 0X
000 Xxxxxx 0-Xxxx, Xxxxxxx-Xx
Xxxxx, 135-283
Fax: (00-0) 000-0000
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
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.
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.