Exhibit 10.4
[REALNETWORKS LETTERHEAD]
April 20, 1999
Global Media Corporation
83 Victoria Crescent
Nanaimo, British Columbia
Canada V9R 5B9
Dear Michael Metcalfe:
This letter shall serve as a formal Agreement between RealNetworks, Inc.
("RN") and Global Media Corporation ("Customer"). Customer desires that RN
perform consulting services in connection with the Global Media Broadcast
Network project ("Broadcast Network") as set forth below.
1. SERVICES. RN shall provide the Services set forth on Attachment A
hereto and shall deliver to Customer all work product and results of such
Services (the "Deliverables") according to the Delivery Schedule set forth on
Attachment A. Customer acknowledges that its timely provision of and
unimpeded access to office accommodations, facilities, equipment, assistance,
cooperation, complete and accurate information and data from its officers,
agents, and employees, and suitably configured computer products are
essential to performance of any Services within the timeframe set forth in
this Agreement and that RN shall not be liable for any deficiency in
performing Services if such deficiency results from Customer's failure to
provide such full cooperation. With respect to the performance of Services,
Customer will not direct or supervise RN's employees or staff at Customer's
premises with respect to said individuals' tasks or responsibilities without
RN's express written consent.
2. ACCEPTANCE. In the event Customer fails to notify RN of any
difficulties or problems with the Deliverables within 30 days after
installation thereof, Customer shall be deemed to have accepted the
Deliverables. Prior to acceptance of such Deliverables, RN shall have the
right to repair or replace the Deliverables at its discretion. Upon
acceptance of such Deliverables, RN shall be under no obligation to repair or
replace such Deliverables.
3. FEES AND PAYMENT.
a. PROGRESS PAYMENTS. Customer will pay RN according to the Payment
Schedule set forth on Attachment A. By executing this Agreement, Customer
confirms the budget for the work, and the charges and purchases set forth in
Appendix A hereto. If Customer wishes to enlarge the scope of the Services
or implement additional features or subtasks, the parties shall agree upon
the costs therefor in advance in writing.
b. EXPENSES. Customer will reimburse RN for incidental expenses and
disbursements incurred by RN related to supplies, media (disks and CD-ROM
costs), travel and related lodging and meals, shipping, telephone charges,
and any other incidental expenses incurred in the performance of the
Services. RN shall bear sole responsibility for expenses incurred to acquire
the necessary tools to perform the Services. If RN needs to procure any
third party computer software, hardware, other office supplies or any other
subcontracted services or products to implement, perform, or install items
set forth in Attachment A, the cost of which will exceed $1000, RN will
notify Customer in advance, and obtain approval for the amount of the
purchase plus any applicable sales tax.
c. BILLING. RN will invoice Customer for expenses and any third
party purchases on a monthly basis. The invoice will include a report
itemizing the expenses and third party purchases. Customer shall pay all
invoices within 30 days of receipt, and shall not make any deductions thereto.
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d. TAXES. The charges do not include taxes or duties. If RN is
required to pay or collect any local, value added, goods and services, or any
other similar taxes or duties based on Services provided under this
Agreement, then such taxes and/or duties shall be billed to and paid by
Customer. This shall not apply to taxes based on RN's income.
4. CHANGE REQUESTS AND COOPERATION. Customer's request for any change in
Services must be in writing; this requirement pertains to all such requests
including but not limited to requests for changes in project plans, scope,
specifications, schedule, designs, or requirements. RN shall not be
obligated to perform tasks described in Customer's request until the parties
agree in writing to the proposed change.
5. NON-SOLICITATION. Customer will not enter into any separate
agreements, written or oral, with current or former employees or staff of RN
without RN's express written consent during the term of this Agreement and
for two (2) years from RN's completion of work performed for Customer by RN
under this or other agreements.
6. TERM; TERMINATION.
a. TERM. This Agreement shall commence as of the Effective Date and
shall remain in effect until the earlier of RN's completion of the Services,
or until terminated in accordance with this Section 4.
b. TERMINATION BY RN. Failure of Customer to make payments to RN in
accordance with this Agreement shall be considered substantial nonperformance
and cause for termination. If Customer fails to make payments when due, RN
may, upon seven days' written notice to Customer suspend performance under
this agreement. Unless payment in full is received by RN within seven days
of the date of the notice, the suspension shall take effect without further
notice. In the event of a suspension of services, RN shall have no liability
to Customer for delay or damage caused Customer because of such suspension of
services.
c. TERMINATION BY CUSTOMER. Customer shall have the right at any
time to terminate this Agreement on twenty-one (21) days' written notice. In
the event of such termination, and provided termination is not as a result of
RN's unremedied breach of this Agreement, Customer shall pay RN then accrued
payments due under the Delivery Schedule, plus the pro-rated portion of the
next payment, if any, due with respect to items being worked on up to the
time of termination, plus reimbursable expenses, plus twenty percent (20%) of
the total charges due through the date of the termination. Should Customer
wish to delete specific subtasks, Customer will notify RN immediately in
writing. As long as said deletions represent less than twenty percent of the
labor cost for the project, Customer shall not be liable for the twenty
percent termination charge.
d. TERMINATION FOR BREACH. Either party may terminate this
Agreement upon seven (7) days' written notice to the other party in the event
the other party materially breaches this Agreement and fails to cure such
breach within fifteen (15) days' written notice from the non-breaching party.
7. SOFTWARE LICENSE.
a. All right, title and interest in and to the Deliverables is owned
by, and shall remain with, RN; provided, however, that Customer shall have
the perpetual, non-exclusive, royalty-free right to use such Deliverables for
internal use in connection with the Broadcast Network project. No license or
other rights in the Deliverables is granted hereby.
b. The Services provided under this Agreement may be in support of
Customer's license to use computer software programs, owned or distributed by
RN, under a separate software license agreement. The software license
agreement shall govern all use by Customer of such programs. Neither this
Agreement nor any Ordering Document includes the grant of any license or any
other rights for such programs.
c. Any Services acquired from RN shall be bid separately from such
program licenses, and Customer may acquire either Services or such program
licenses without acquiring the other.
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8. WARRANTY. RN represents, warrants and covenants that: (i) any
Deliverables, information or materials developed for, or any advice provided
to RN, shall not rely or in any way be based upon confidential or proprietary
information or trade secrets obtained or derived by RN from sources other
than RN unless RN has received specific authorization in writing to use such
proprietary information or trade secrets; (ii) RN will not enter into any
contracts or otherwise obligate Customer in any way without Customer's
express approval; and (iii) RN will perform the Services consistent with
generally accepted industry practices. Customer must report any deficiencies
in the Services to RN in writing within thirty (30) days of completion of the
Services in order to receive warranty remedies. THE WARRANTY HEREIN IS
EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED,
INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. FOR ANY BREACH OF THE ABOVE WARRANTY, CUSTOMER'S
EXCLUSIVE REMEDY, AND RN'S ENTIRE LIABILITY, SHALL BE THE RE-PERFORMANCE OF
THE SERVICES. IF RN FAILS OR IS UNABLE TO RE-PERFORM THE SERVICES AS
WARRANTED, CUSTOMER SHALL BE ENTITLED TO RECOVER THE FEES PAID TO RN FOR THE
DEFICIENT SERVICES.
9. RESPONSIBILITY FOR CUSTOMER CONTENT AND SITES; INDEMNIFICATION. Except
for the Services to be provided by RN hereunder, as between Customer and RN,
Customer shall be completely and solely responsible for all matters relating
to any content or material ("Content") owned or used by Customer in
connection with any equipment provided by RN, and in connection with
Customer's Internet web site, intranet, or extranet system (collectively,
"Sites"). Customer shall remain solely responsible and liable for the
Content and the Sites, and RN assumes no responsibility for editing,
reviewing, controlling or any other activities associated with the use or
publication of any of the Content, the operation and maintenance of
Customer's Sites, and shall have no liability to any third party in
connection with such activities, whether or not RN undertakes such
responsibilities. Customer hereby agrees to indemnify, hold harmless and
defend RN and its employees, contractors and agents from all claims, damages,
costs and expenses, including reasonable attorneys' fees and litigation
expenses, arising out of or in connection with any Content or the Site.
10. CONFIDENTIAL INFORMATION. From the date of execution hereof for a
period of five (5) years from termination of this Agreement, neither party
shall use, disclose, or permit any person to obtain any confidential
information of the other party, including any materials developed or
generated hereunder (whether or not such confidential information is in
written or tangible form), except as specifically authorized by such party.
As used herein, confidential information shall mean a whole or any portion or
phase of any marketing plans, business plans, sales information, customer
lists, scientific or technical information, design, process, procedure,
formula, or improvement relating to the development, design, construction,
and operation of a program that is valuable and not generally known to a
party's competitors and any other information of a party of which the other
party becomes aware of as a result of this Agreement and which is indicated
to be confidential or, if not so indicated, which could reasonably be
interpreted to be confidential. The parties agree that, in the event of a
breach or threatened breach of the terms of this confidentiality provision,
the non-breaching party shall be entitled to an injunction prohibiting any
such breach. Any such relief shall be in addition to and not in lieu of any
appropriate relief in the way of money damages. The parties acknowledge that
Confidential Information is valuable and unique and that disclosure in breach
of this confidentiality provision will result in irreparable injury to its
owner.
11. NO ASSIGNMENT. Neither party shall assign, transfer or otherwise
dispose of this Agreement or any rights or duties hereunder without the prior
written consent of the other.
12. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR
ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR
LOSS OF PROFITS, REVENUE, DATA, OR USE, INCURRED BY EITHER PARTY OR ANY THIRD
PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT, EVEN IF THE OTHER PARTY OR
ANY OTHER PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. RN'S
LIABILITY FOR DAMAGES HEREUNDER SHALL IN NO EVENT EXCEED THE AMOUNT OF FEES
PAID BY CUSTOMER UNDER THE APPLICABLE ORDERING DOCUMENT.
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13. MISCELLANEOUS. This Agreement and Attachment A attached hereto and
incorporated herein constitute the entire agreement between the parties, and
supersedes any and all agreements, whether written or oral, and may only be
amended or modified by a written instrument signed by both parties. Any
controversy, dispute or question arising out of, in connection with or in
relation to this Agreement or its interpretation, performance or
nonperformance, or any breach thereof, shall be determined by arbitration in
the County of King, State of Washington, in accordance with the rules then
obtaining of the American Arbitration Association. The cost and expenses of
such arbitration shall be paid by the party against whom the arbitrator
renders a decision. The decision of the arbitrator shall be final and
binding upon the parties hereto and may be entered as a final decree or
judgment in any court of competent jurisdiction. It is expressly agreed that
the terms and conditions of this Agreement and any Ordering Document
supersede the terms of Customer's purchase order.
If the terms of this Letter Agreement are acceptable to you, please sign and
date where indicated below and return to RN.
Sincerely,
RealNetworks, Inc.
By: /s/ MARTIN SCHWARZ
--------------------------
Martin Schwarz
General Manager, Consulting Group
Accepted and Agreed to
this _____ day of April, 1999.
Customer: Global Media Corporation
By: /s/ MICHAEL METCALFE
---------------------------
Print Name: MICHAEL METCALFE
-------------------
Title: PRESIDENT
------------------------
EFFECTIVE DATE: 20 APRIL 1999
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[REAL NETWORKS LOGO]
ATTACHMENT A
PROPOSAL FOR GLOBAL MEDIA
BROADCAST NETWORK SERVICES
Prepared for Global Media Corporation
April 20, 1999
This document contains proprietary information belonging to RealNetworks,
Inc. No use or disclosure of the information contained herein is permitted
without the prior written consent of RealNetworks, Inc.
PROPOSAL FOR GLOBAL MEDIA BROADCAST NETWORK SERVICES [REAL NETWORKS LOGO]
- -------------------------------------------------------------------------------
1.0 BACKGROUND
Per several discussions held between RealNetworks and Global Media
Corporation (Global Media), Real Networks is proposing a build out of a new
service for Global Media for the private branded delivery of audio and video
content from radio stations (and TV stations) to Internet consumers. The new
service is referred to as the Global Media Broadcast Network (GMBN) in this
scope of work and proposal.
The overall objective of Global Media is to quickly bring to market a service
for radio stations and TV stations to deliver audio/video content on the
Internet with a unique revenue share model for the radio station owners,
advertisers and Global Media. Global Media anticipates launching a service
that will attract tens of thousands of content providers (stations and group
owners) to use the Global Media player faceplate, encoder services and
delivery network for delivery of content on the web.
The consumer, using a personal computer on the Internet, will be offered
several unique services within the player including listening to any of the
live radio stations, simulated live (on-demand) playlists of music, and video
(TV or similar programming). Along with listening/viewing this traditional
content the consumer/user can "interact" with the player and the "experience"
by viewing album covers, voting for songs, see scrolling text messages,
participate in live DJ chat, purchase consumer goods and content on-line,
view advertising, and build personal preferences for their own environment.
The current strategy of Global Media is to announce the GMBN service within
the next 30 days and begin leveraging RealNetworks assets (such as RBN and
RealNetworks Consulting) to build out the GMBN in 1999. RealNetworks
Consulting (RN Consulting) will provide services and application development
to turnkey the design, architecture, programming/coding, testing,
installation, deployment, launch and training/turn-over of the GMBN for a
successful launch of this first-to-market offering on the Internet.
2.0 GLOBAL MEDIA BROADCAST NETWORK OVERVIEW
Global Media requires a number of key systems to be designed and developed to
build the Global Media Broadcast Network. The following diagram provides a
general overview of the critical components to be developed and integrated
into the GMBN:
[THE GLOBAL MEDIA BROADCAST NETWORK GRAPHIC]
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PROPOSAL FOR GLOBAL MEDIA BROADCAST NETWORK SERVICES [REAL NETWORKS LOGO]
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Global Media requires RN Consulting to design, architect, prototype,
application program, test, install, deploy and project manage the integration
of each of these functional components of the Global Media Broadcast Network.
Global Media will be responsible for the content (radio and TV stations),
commerce (e-catalog, e-commerce, back-end systems), advertising (ad
inventory, ad database, etc.) and operation of the entire system. Likewise,
Global Media representatives will be required to be assigned to the project
to approve storyboards, make design and architectural designs, provide
interfaces to back-end systems, assign resources to be trained, managed and
to operate the GMBN system, procure hardware/software, assign resources for
the physical deployment of the system, and related services.
RealNetworks Consulting will be responsible for turnkey development and
installation of the following components:
- Global Media Player
- Radio Station Encoder Station
- HeadEnd Manager (and interface to Real Broadcast Network service)
- Ad Server Integration
- Commerce Server Integration
- Global Media Guide
- On-Demand Content Manager
- Live DJ Application
- Jukebox Application
- Project Management
Each of these components will be developed with scalability in mind (i.e.,
support for tens of thousands of stations) operation using RBN (for network
and delivery transport system), management by Global Media resources (tools
to automate and allow Global Media personnel to manage the system after
deployment), and allow for future expansion (architecture that allows adding
features or enhancements to the Broadcast Network operations and "user
experience" on future projects with RealNetworks).
3. SCOPE OF WORK
3.1 PROJECT PHASES
An overview of the tasks and functions (scope of work) to be performed by
RealNetworks Consulting is presented in this section. The project is to be
accomplished with four (4) critical phases:
- -------- --------------------------------------------------- ----------------------------------
PHASE DESCRIPTION SCHEDULE (CURRENT ESTIMATE)
- -------- --------------------------------------------------- ----------------------------------
Phase 1 Basic RBN Hosting and Basic Player for Global Media Project Start Date (April '99)
Phase 2 First Major Code Release: Initial Player, HeadEnd, Start Date + 3 months (July '99)
Encoder, Ad and Commerce Services
Phase 3 Second Major Code Release: Enhanced Player, Start Date + 5 months (Sept '99)
HeadEnd, Encoder, Ad and Commerce Services; Initial
DJ, On-Demand Manager, JukeBox and Guide
Phase 4 Final Code Release: All Components Production-ready Start Date + 8 months (Dec '99)
- -------- --------------------------------------------------- ----------------------------------
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PROPOSAL FOR GLOBAL MEDIA BROADCAST NETWORK SERVICES [REAL NETWORKS LOGO]
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3.2 PROJECT DEPLOYMENT METHODOLOGY
The following provides a summary of the methodology used for the project to
deliver the turnkey Global Media Broadcast Network system in a timely fashion.
- - Needs Analysis and System Component Design
- General business analysis (audience, business model, future plans)
- Functional systems requirements analysis (GMBN components and back-end
systems)
- System and network infrastructure analysis (confirm RBN specifications
for GMBN)
- Infrastructure design (LAN, WAN, splitters, load balancing, etc., for
GMBN)
- Server system designs (encoder servers, multicast & on-demand media
servers, data base servers, archive servers, web servers and other
servers)
- Component application storyboards and functional system design
specifications for each component (player, encoder, headend, ad
server, commerce server, guide, on-demand manager, live DJ, jukebox)
- Specifications for the live and on-demand broadcast system
administration and operations; content management, reporting and usage
system; back-office systems integration and any third party product
integration
- ISP and broadband vendor system integration design (as necessary with
RBN)
- Develop master project schedule and master test plan (schedule and
draft)
- Provide procurement assistance
- Consultation on Global Media systems integration (commerce,
accounting/pay per view, ad management, web, data base, user
profiling, station acquisition, etc.)
- Initial deployment of Real Broadcast Network (RBN) hosting services
and basic player functions (Phase 1)
DELIVERABLES: SYSTEM DESIGN DOCUMENT, DETAILED PROJECT SCHEDULE/PLAN, AND
PHASE 1 DEPLOYMENT
- - Software Component Development
- Rapid application prototyping (and some joint application prototyping
with Global Media on ad serving and commerce systems) including:
- Application programming
- Scripting, batch processes
- API/SDK integration
- development, customization and integration of all components
into the GMBN
- Systems integration and application development for integration to
Global Media supplied systems (ad service commerce server, master web
service, and other non-RealNetworks/Real Broadcast Network
components)
- Global Media Broadcast Network administration and operations
customization including monitoring, content acquisition, content
distribution, system management, scheduling, usage, reporting, etc.
- Back-end systems integration and customization
- - DELIVERABLES: COMPONENT CODE DROPS
- - System Deployment
- Centralized servers, encoders, and systems staging, configuration,
installation, testing, validation, system documentation, and shipping
- Integration and installation tasks at Real Broadcast Network
- Configuration, installation, testing, validation,
modification/customization, documentation of Global Media Broadcast
Network Operations Center (NOC)
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PROPOSAL FOR GLOBAL MEDIA BROADCAST NETWORK SERVICES [REAL NETWORKS LOGO]
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- Coordination of on-site deployments (radio/TV stations) including
technical support, dial-in testing, validation/testing, training, etc.
- Broadcast Network operations and administration software installation,
configuration and integration
- GMBN scheduling, monitoring and reporting application installation,
configuration and integration
- Encoder monitoring and player monitoring system integration
- Content management system installation, configuration and integration
DELIVERABLES: INSTALLATION OF THE GMBN NETWORK OPERATIONS CENTER
- - Testing
- Unit (component) testing
- System (integrated components and back-end systems) testing
- Operational readiness testing (ORT) on GMBN
DELIVERABLES: PHASE 2 DEPLOYMENT OF INITIAL PLAYER, HEADEND MANAGER, RADIO
STATION ENCODER AND AD SERVER/COMMERCE COMPONENTS
DELIVERABLES: PHASE 3 DEPLOYMENT OF PRODUCTION-READY COMPONENTS AND
INITIAL VERSIONS OF DJ, JUKEBOX, ON-DEMAND MANAGER AND GUIDE
COMPONENTS.
- - Training and Documentation
- Complete component training
- Broadcast Network system administration and operations training
- Customized scheduling, monitoring and reporting training
- Remote site logistics, troubleshooting methods and consultation
- Content creation and content management training
- System documentation
- Post-deployment software support and maintenance
DELIVERABLES: PHASE 4 DEPLOYMENT OF TURNKEY PRODUCTION-READY AND SCALABLE
GMBN SYSTEM WITH ALL COMPONENTS TESTING COMPLETE
The main deliverable from this methodology and the associated deliverables is
a turnkey, RealNetworks G2-enabled Broadcast Network system customized for
Global Media which will operate and manage the thousands of content sources
and manage the streaming of media onto the Internet via RBN. The
production-ready deployment of the GMBN will result in delivering a
compelling user experience for consumer listening/viewing of the Global Media
private branded content. This system should result in garnering advertising
revenues and consumer goods commerce revenues for Global Media (and their
affiliates) resulting from this consumer usage model.
3.3 COMPONENT FUNCTIONAL SPECIFICATIONS
This section outlines each of the major system components for the Global
Media Broadcast Network and the key tasks and deliverables to be developed by
RealNetworks Consulting.
[OMITTED CONFIDENTIAL INFORMATION FILED SEPARATELY WITH THE SEC.]
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PROPOSAL FOR GLOBAL MEDIA BROADCAST NETWORK SERVICES [REAL NETWORKS LOGO]
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3.4 REALNETWORKS PROJECT TEAM
From the tasks and requirements listed above, a team of RealNetworks
Consulting resources is required to satisfy the multiple design and
deployment activities for the Global Media Broadcast Network system. Based
on the requirements and tasks outlined for Global Media, and RealNetworks
Consulting past experience of similar systems deployments, it is estimated
that a team of six to ten RealNetworks Consulting resources will be required
for the GMBN project. These individuals include a combination of project
management, senior software development programmers, web programming team,
database architect and specialists, QA/test engineers, systems consultants
and system engineers.
A full time Project Manager will be assigned as the overall program manager
for the project. The Project Manager will augment and supplement Global
Media's existing staff with specialized expertise on streaming media,
networking (LAN/WAN/Internet), content publishing/creation, broadcast
services, software development, business processes/systems policies, and
related knowledge transfer to Global Media's staff throughout the project
term. This individual will be an integral part of the Consulting Team and
have an on-site presence at Global Media to deliver the necessary expertise
for the various phases of the project and GMBN solution.
It is estimated that the RealNetworks G2 Broadcast Network system for Global
Media will require approximately eight (8) calendar months to complete and
deliver; from analysis to final testing/deployment with the team proposed.
It may be necessary to introduce a number of RealNetworks Consulting
resources into the project at peak deliverable periods in addition to the
assigned project team. A detailed scope of work and project schedule will be
developed/delivered upon completion of the initial needs analysis tasks.
In addition to the skills maintained by the Project Manager and RN Consulting
resources assigned to the Global Media project, the team will also have
access to subject matter experts within the RealNetworks Consulting group
(consultants and developers), RealNetworks core technology group (software
developers), RBN group (system operators and consultants), and related
divisions within RealNetworks to develop, customize and deploy the GMBN
system specific to Global Media's requirements. The team assigned to Global
Media will act as a conduit for critical thinking, analysis, solutions,
recommendations and experience to Global Media's project team appropriately.
4.0 COSTS AND SCHEDULE
[OMITTED CONFIDENTIAL INFORMATION FILED SEPARATELY WITH THE SEC.]
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PROPOSAL FOR GLOBAL MEDIA BROADCAST NETWORK SERVICES [REAL NETWORKS LOGO]
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