Encoding Services and Compact Disc Purchase Agreement - Loudeye Technologies Inc. and XM Satellite Radio Inc.


Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as [ * ]. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.


                                   AGREEMENT
                                        

     This Encoding Services and Compact Disc Purchase Agreement ("Agreement") is
entered into as of August 25, 2000 (the "Effective Date") by and between Loudeye
Technologies, Inc., a Delaware corporation ("Loudeye") and XM Satellite Radio
Inc., a Delaware corporation ("XM")

     WHEREAS, Loudeye is in the business of providing encoding services to third
parties and is an authorized distributor of compact discs;

     WHEREAS, XM wishes to purchase certain compact discs from Loudeye to
populate its music library and wishes to engage Loudeye to encode those compact
discs in the formats set forth herein to facilitate the transmission of XM's
programming.

     NOW THEREFORE, intending to be legally bound, and in consideration of the
mutual promises and covenants contained herein, the parties agree as follows:

1    Definitions.

     1.1  "CDs" shall mean one or more compact discs released in one (1) package
          and containing one or more sound recordings in digital format.

     1.2  "DLT" shall mean digital linear tapes.

     1.3  "Encode" or "Encoding" shall mean, with regard to the CDs, encoding
          the audio in accordance with the specifications set forth on Exhibit
          B-1.

     1.4  "Meta Data" shall mean the information set forth in Exhibit B-3

2    Purchase of CDs.

     2.1  Volume Purchase.  XM will purchase from Loudeye the CDs listed on
          Exhibit A attached hereto and any other CD purchase order which the
          parties may execute from time to time.

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     2.2  Bar Coding.  Prior to delivery to XM, Loudeye shall bar code each CD
          with a unique identifier to ensure that future releases will not be in
          conflict with older releases in XM's library.

     2.3  [ * .] XM shall have the right to [ * ] by Loudeye. Loudeye shall
          [ * .]

     2.4  Delivery.  In accordance with the schedule set forth in Exhibit C,
          Loudeye will deliver the CDs to XM at the address listed in Exhibit C.

3    Encoding.

     3.1  Blue Line Acceptance Test.  Loudeye shall Encode sample CD's in
          accordance with the specifications set forth in Exhibits B-1 (the
          "Sample"). On or before [ * ], Loudeye will submit the Sample to XM
          for review.

          (a)  If, [ * ] the Sample is acceptable, and XM communicates such
               acceptance of the Sample to Loudeye no later than [ * ] the
               Sample shall become the Blue Line Sample and Loudeye shall begin
               Encoding the CDs in accordance with the schedule and requirements
               set forth in Exhibit C.

          (b)  If, [ * ] the Sample is unacceptable, XM may [ * ] or XM may
               request that Loudeye submit a new Sample and the previous
               provisions shall similarly apply to such new Sample; provided,
               however that the schedule and requirements set forth in Exhibit C
               shall be adjusted as necessary to reflect the new XM acceptance
               date.

     3.2  Delivery.  Subject to the provisions above in section 3.1, [ * ]
          Loudeye shall deliver the encoded CDs, and related Meta Data in
          accordance with the schedule and requirements set forth in Exhibit C
          attached hereto.

4    Price and Payment Terms.

     4.1  CDs.  XM shall pay to Loudeye [ * ] for the purchase of each CD. Upon
          shipment of the CDs from the provider of the CDs, Loudeye shall
          invoice XM for the CDs shipped, plus an administrative fee of [ * ] of
          the CDs shipped, and XM shall pay the invoice within [ * ] days of
          receipt of that invoice. [ * ] shall pay reasonable shipping costs and
          expenses.

     4.2  Encoding.  XM shall pay Loudeye [ * ] per CD for encoding the CD and
          providing the Meta Data.

          4.2.1  Deposit.  Within [ * ] days from the Effective Date, XM shall
                 pay Loudeye [ * ] ("Deposit"). If the Agreement is terminated
                 pursuant to Section 5.4, the Deposit [ * ]

          4.2.2  Encoding.  Upon each delivery of the encoded files and Meta
                 Data as set forth in Exhibit C, Loudeye shall invoice XM. The
                 Deposit shall first be applied to all amounts owed hereunder.
                 Any amount invoiced in excess of

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                 the Deposit shall be paid within [ * ] days of XM's receipt of
                 an invoice.

     4.3  Other Terms.  Payment must be made in U.S. Dollars and may be made in
          cash, cashiers check, money order, travelers' checks, check or
          Visa/MasterCard. Interest at the maximum allowed by law will be
          charged on all accounts not paid by due date unless previous
          arrangements have been made by Loudeye.

     4.4  Subsequent Deliveries.  Upon request of XM, subsequent deliveries of
          encoded CDs will be provided at an agreed to time. Such request shall
          be made through the Loudeye external system interface. XM shall
          receive an additional [ * ] CDs during the year 2001 at a cost of
          [ * ] per encoded CD. Loudeye shall invoice XM for the year 2001
          deliveries [ * ], which shall be due net [ * ] days from date of
          invoice.

5    Term and Termination.

     5.1  Term.  The term of this Agreement shall begin on the Effective Date
          and shall continue until December 31, 2001, unless otherwise
          terminated by either party.

     5.2  Termination for Cause.  Either party may terminate this Agreement in
          the event of any material breach of the Agreement by the other party;
          provided, that such breach shall not result in termination if the
          breach is cured by the other party within [ * ] days of receipt of
          such notice.

     5.3  Termination Without Cause.  XM may terminate this Agreement for its
          convenience upon [ * ] days notice to Loudeye. Loudeye may terminate
          this Agreement for convenience upon [ * ] days notice after the
          initial production of approximately [ * ] CDs have been encoded and
          files delivered. 5.4 [ * ]

6    Confidentiality.

     6.1  Except as expressly set forth herein, the parties shall maintain in
          confidence the terms of this Agreement. During the term of this
          Agreement, the parties may disclose to one another certain information
          which is considered by the disclosing party to be proprietary or
          confidential information (the "Confidential Information").
          Confidential Information is defined as any information, communication
          or data, in any form, including, but not limited to, oral, written,
          graphic or electromagnetic forms, models or samples, which the
          disclosing party identifies as confidential or which is of such a
          nature that the receiving party should reasonably understand that the
          disclosing party desires to protect such information, communication or
          data against unrestricted disclosure or use, including, without
          limitation, site traffic and performance data, business information,
          financial data and marketing data. All Confidential Information shall
          remain the sole property of the disclosing party and its
          confidentiality shall be maintained and protected by the receiving
          party with the same degree of care as

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          the receiving party uses for its own confidential and proprietary
          information. The receiving party shall not use the Confidential
          Information of the other party except as necessary to fulfill its
          obligations under this Agreement, nor shall it disclose such
          Confidential Information to any third party without the prior written
          consent of the disclosing party.

     6.2  The restrictions on the use or disclosure of any Confidential
          Information shall not apply to any Confidential Information: (i) after
          it has become generally available to the public without breach of this
          Agreement by the receiving party; (ii) that is rightfully in the
          receiving party's possession prior to disclosure to it by the
          disclosing party; (iii) that is independently developed by the
          receiving party; (iv) that is rightfully received by the receiving
          party from a third party without a duty of confidentiality; or (v)
          that is disclosed under operation of law.

     6.3  Press Releases.  Loudeye and XM may enter into a joint press release
          upon execution of the Agreement, provided that the parties can
          mutually agree upon the language of such press release.

7    Warranties

     7.1  Loudeye represents and warrants to XM that:

          7.1.1  All of the services to be performed by Loudeye hereunder will
                 be rendered in a first-class professional manner by qualified
                 personnel;

          7.1.2  None of the services performed hereunder will infringe or
                 otherwise violate any third party patent, copyright, trade
                 secret or other intellectual property right (provided, however
                 that the foregoing does not include the possible infringement
                 of the rights of others by content provided by XM to Loudeye
                 for encoding as contemplated under this Agreement);

          7.1.3  The encoded CDs shall comply with the Blue Line Sample;

          7.1.4  Loudeye recognizes that the delivery schedule set forth in
                 Exhibit C is a material part of this Agreement.

     7.2  LOUDEYE SHALL NOT BE LIABLE FOR PROFITS OR OTHER DAMAGES CAUSED BY THE
          LOSS, DAMAGE OR DESTRUCTION OF MATERIALS BELONGING TO XM OR ANY OTHER
          PERSON IN POSSESSION OF LOUDEYE UNLESS CAUSED BY THE NEGLIGENCE OF
          LOUDEYE IN WHICH EVENT, THE LIABILITY SHALL BE LIMITED TO THE
          REPLACEMENT OF A SIMILAR QUANTITY OF BLANK TAPE OR MAGNETIC OR OPTICAL
          MEDIA TO THE MATERIALS WHICH WERE LOST, DAMAGED OR DESTROYED.
          NOTWITHSTANDING THE FOREGOING, IN THE EVENT THAT ANY CD'S PURCHASED
          HEREUNDER BY XM ARE LOST, DAMAGED OR DESTROYED WHILE IN THE POSSESSION
          OF LOUDEYE DURING ITS PROVISIONS OF ITS SERVICES HEREUNDER, LOUDEYE
          SHALL REPLACE SUCH CD'S WITH

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          SUBSTITUTE CD'S. EXCEPT FOR THE ABOVEMENTIONED REPLACEMENTS, LOUDEYE
          SHALL HAVE NO FURTHER LIABILITY REGARDING THE LOSS, DAMAGE OR
          DESTRUCTION OF THE AFOREMENTIONED MATERIALS OR CD'S. IF MATERIALS
          FURNISHED BY LOUDEYE ARE FOUND TO BE DEFECTIVE IN MANUFACTURE, LOUDEYE
          SHALL REPLACE SUCH MATERIALS WITH A SIMILAR QUANTITY OF BLANK TAPE OR
          MAGNETIC OR OPTICAL MEDIA, PROVIDED XM NOTIFIES LOUDEYE IN WRITING
          WITHIN THIRTY DAYS AFTER SHIPMENT OF SUCH DEFECT. EXCEPT FOR SUCH
          REPLACEMENT, LOUDEYE SHALL HAVE NO FURTHER LIABILITY IN CONNECTION
          WITH SUCH DEFECTIVE MATERIALS. EXCEPT AS OTHERWISE EXPRESSLY CONTAINED
          HEREIN, LOUDEYE MAKES NO WARRANTY, EXPRESSED OR IMPLIED WITH RESPECT
          TO THE MATERIALS OR SERVICES PROVIDED BY IT. EXCEPT AS OTHERWISE
          EXPRESSLY CONTAINED HEREIN, LOUDEYE EXPRESSLY DISCLAIMS ALL WARRANTIES
          EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE, INCLUDING ANY IMPLIED
          WARRANTY OF MERCHANTABILTY. ALL WARRANTIES WITH RESPECT TO THE SERVICE
          ARE STRICTLY LIMITED TO THOSE SET FORTH HEREIN. IN NO EVENT SHALL
          EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INDIRECT,
          SPECIAL OR INCIDENTAL DAMAGES EVEN IF SUCH PARTY HAS BEEN ADVISED OF
          THE POSSIBILITY OF SUCH DAMAGES.

     7.3  Loudeye agrees that it maintains third party liability insurance
          policies and is insured against any covered third party liability
          claims arising from property damage while on the premises of Loudeye.

8    Indemnification

     8.1  Except with respect to claims covered in the following section or
          otherwise related to the content provided by XM to Loudeye, Loudeye
          agrees to defend, protect, indemnify and hold harmless XM from and
          against all third party claims of any kind resulting from (a) the
          services provided by Loudeye on behalf of XM hereunder, except for any
          damages arising exclusively out of any material breach of this
          acknowledgment by XM, (b) any violation of any applicable federal,
          state or local laws by Loudeye in the course of performing the
          services on behalf of XM or (c) except for claims for which XM owes an
          indemnification duty to Loudeye as provided hereunder, any claim that
          the performance of the services infringes or otherwise violates any
          patent, trademark, copyright, trade secret or other intellectual
          property right.

     8.2  XM agrees to defend, protect, indemnify and hold harmless Loudeye from
          and against all third party claims of any kind resulting from any
          claim that the performance of the services infringes any copyright,
          including but not limited to any and all performance license rights,
          mechanical license rights, synchronization

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          license rights and rights under the Digital Performance Right in Sound
          Recordings Act of 1995, in the sound recordings or musical
          compositions that comprise the works being reproduced and encoded by
          Loudeye.

     8.3  The indemnification obligations under this Section are subject to the
          following conditions: (a) the indemnified party shall notify the
          indemnifying party in writing promptly after the indemnified party
          becomes aware of a covered claim or the possibility thereof; provided,
          however, that a failure to notify shall not diminish the indemnifying
          party's obligations except to the extent that the indemnifying party
          is materially prejudiced as a result of such failure to notify; (b)
          the indemnified party shall reasonably cooperate, at the indemnifying
          party's reasonable expense, in good faith in the defense of a covered
          claim and the indemnifying party shall select counsel reasonably
          acceptable to the indemnified party to defend such claim and all costs
          of such counsel shall be borne by the indemnifying party, provided
          that the indemnified party may elect to participate in any covered
          claim with an attorney of its own choice and its own expense; and (c)
          the indemnifying party shall have sole control of the settlement,
          compromise, negotiation and defense of any covered claim, provided,
          however, that neither party may settle any such claim without the
          other party's prior written consent which shall not be unreasonably
          withheld or delayed.

9    General Provisions

     9.1  Independent Contractors.  The parties are entering this Agreement as
          independent contractors, and this Agreement will not be construed to
          create a partnership, joint venture or employment relationship between
          them. Neither party will represent itself to be an employee or agent
          of the other or enter into any agreement on the other's behalf of or
          in the other's name.

     9.2  Compliance with other Laws.  In its performance of this Agreement,
          each party will comply with all applicable laws, regulations, orders
          and other requirements, now or hereafter in effect, of governmental
          authorities having jurisdiction. Without limiting the generality of
          the foregoing, each party will pay, collect and remit such taxes as
          may be imposed with respect to any compensation, royalties or
          transactions under this Agreement. Except as expressly provided
          herein, each party will be responsible for all costs and expenses
          incurred by it in connection with the negotiation, execution and
          performance of this Agreement.

     9.3  Force Majeure.  Neither party will be liable for, or will be
          considered to be in breach of or default under this Agreement on
          account of, any delay or failure to perform as required by this
          Agreement as a result of any causes or conditions that are beyond such
          party's reasonable control and that such party is unable to overcome
          through the exercise of commercially reasonable diligence. If any
          force majeure event occurs, the affected party will give prompt
          written notice to the other party and will use commercially reasonable
          efforts to minimize the impact of the event.

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     9.4  Notices.  Any notice or other communication required or permitted to
          be made or given by either party pursuant to this Agreement will be in
          writing, and will be deemed to have been duly given: (a) three (3)
          business days after the date of mailing if sent by certified U.S.
          mail, postage prepaid with return receipt requested; (b) when
          transmitted if sent by facsimile, provided a confirmation of
          transmission is produced by the sending machine and a copy of such
          facsimile is promptly sent by another means specified in this section;
          or (c) when delivered if delivered personally or sent by express
          courier service. All notices shall be sent to the other party at its
          address as set forth below.

          To XM:

               Patty Armacost

               Director, Contracts

               XM Satellite Radio Inc.

               1500 Eckington Place NE

               Washington, DC 20002-2194


          To Loudeye:

               Meena Kang Latta

               Loudeye General Counsel

               Loudeye Technologies Inc.

               414 Olive Way, Suite 300

               Seattle, WA  98101

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     9.5  Assignment.  Neither party may assign this Agreement, in whole or in
          part, without the other party's prior written consent (which consent
          will not be unreasonably withheld), except to (a) any corporation
          resulting from any merger, consolidation or other reorganization
          involving the assigning party, (b) any of its affiliates, or (c) any
          individual or entity to which the assigning party may transfer
          substantially all of its assets; provided that the assignee agrees in
          writing to be bound by all the terms and conditions of this Agreement.
          Subject to the foregoing, this Agreement will be binding on and
          enforceable by the parties and their respective successors and
          permitted assigns.

     9.6  No Waiver; Severability.  The failure of either party to enforce any
          provision of this Agreement will not constitute a waiver of the
          party's rights to subsequently enforce the provision. The remedies
          specified in this Agreement are in addition to any other remedies that
          may be available at law or in equity. If any provision of this
          Agreement shall be declared by any court of competent jurisdiction to
          be illegal, void or unenforceable, the remaining provisions of this
          Agreement shall not be affected and shall remain in full force and
          effect.

     9.7  Entire Agreement.  This Agreement (a) represents the entire agreement
          between the parties with respect to the subject matter hereof and
          supersedes any previous or contemporaneous oral or written agreements
          regarding such subject matter, (b) may be amended or modified only by
          a written instrument signed by a duly authorized agent of each party,
          and (c) will be interpreted, construed and enforced in all respects in
          accordance with the laws of New York, without reference to its choice
          of law rules. Any action relating to this Agreement must be brought in
          state or federal courts located in New York, and the parties
          irrevocable consent to the jurisdiction of such courts.

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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
     Effective Date.


                                    LOUDEYE TECHNOLOGIES, INC.



                                    By: /s/ Martin Tobias
                                        -------------------------------
                                    Name:  Martin Tobias
                                    Title: Chief Executive Officer



                                    XM SATELLITE RADIO, INC.



                                    By: /s/ Hugh Panero
                                        -------------------------------
                                    Name:  Hugh Panero
                                    Title: President and Chief Executive Officer

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                                   Exhibit A

                                      CDs

     As listed in Excel File XM_Final_CD_Order dated June 22, 2000.

                                       10

 
                                  Exhibit B-1

                                   ENCODING

          Encoding specifications shall following the specifications set forth
          in the following sections of the [ * :]


          -------------------------------------------------------------
          [ * ],                       [ * ]
          -------------------------------------------------------------
          [ * ]                        [ * ]
          -------------------------------------------------------------
          [ * ]
          -------------------------------------------------------------
          [ * ]
          -------------------------------------------------------------
          [ * ]
          -------------------------------------------------------------
          [ * ]                        [ * ]
          -------------------------------------------------------------
          [ * ]
          -------------------------------------------------------------


          Sections of the aforementioned document not specifically mentioned
          above will not pertain to this contract.  In particular, it is
          understood by both parties that the data specifications are defined by
          Exhibit B-3 of this Agreement and not by anything contained in the
          aforementioned document.

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                                  Exhibit B-3
                                   Meta Data


Loudeye will provide XM, or entity designated by XM to receive such information
with a XML dataset consisting of [ * ] CD's on or before [ * ].
 
Data fields for Non-Classical titles are given by [ * ] with the exception that 
the [ * ] will not be provided. Both parties understand that the [ * ] is not 
[ * ]. Loudeye will provide [ * ] for each CD to XM.

Data fields for Classical titles are given by Section [ * ] with the exception 
that [ * ] will not be provided. [ * ] will be responsible for adding the "LE" 
extension to the Loudeye unique identifier. Classical data will be delivered
[ * ] but to be on or before [ * ].


**Track length is actual time calculated from the ripping software during the
production process.


Data fields and tables are subject to change; Loudeye will map any changes from
the UPC to the masterbarcode.

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--------------------------------------------------------------------------------

                                   Exhibit C

                                   Delivery


     Subject to the receipt of XM's acceptance of the Sample on or before [ * ,]
     Loudeye Technologies shall deliver the following items in accordance with
     the delivery schedule noted below.

     ----------------------------------------------------------------------
     Item                           Quantity               Delivery Date
     ----------------------------------------------------------------------

     ----------------------------------------------------------------------
     Meta-Data *                    [ * ]                  [ * ]
     ----------------------------------------------------------------------
     Blue Line Demo                 [ * ]                  [ * ]
     ----------------------------------------------------------------------
     Music Files on DLT, and        [ * ]                  ]
     Meta-data  (per Exhibit A)
     ----------------------------------------------------------------------
     Associated CDs                 [ * ]                  [ * ]
     ----------------------------------------------------------------------

     ----------------------------------------------------------------------


     *[ * ]CDs worth of this Meta-data [ * ] by Loudeye to the physical CD at
     the time of delivery on [ * ].


     All deliveries shall be [ * .] [ * ] shall be responsible for all
     expenses associated with shipping, handling and insurance. Loudeye
     Technologies shall use reasonable commercial efforts to encode [ * ] CDs
     per [ * ], but this number may vary in any particular [ * ]; provided,
     however, Loudeye Technologies shall encode an average of [ * ] CDs per
     [ * ] in any given [ * ] period during the initial production run.


     All deliveries shall be made to the following address:

          XM Satellite Radio Inc.
          1500 Eckington Place NE
          Washington, DC 20002-2194

          Attention:  Charles Logan

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